May 10, 2019 / 8:10 AM / 9 months ago

NSF dismisses Provident's concerns as 'scaremongering'

(Reuters) - Sub-prime lender Non-Standard Finance (NSF) and Provident Financial exchanged blows again on Friday, with NSF accusing its larger rival of “scaremongering” as it resists a $1.69 billion hostile takeover bid.

Provident said that 96% of the shares held by its independent shareholders have yet to be signed up to NSF’s offer for the larger company, just days before a final deadline the latter has given for the deal to be accepted.

Three funds - Woodford, Invesco and Marathon - holding more than 50% of Provident and a majority stake in NSF have all backed the bid, led by current NSF Chief Executive Officer and former Provident boss John van Kuffeler.

That leaves NSF way short of the target of support of 90% of shares it set when it made the original offer in February. It has said it would not extend the closing date for the offer past its latest deadline of May 15.

Provident’s third-biggest shareholder British asset manager Schroders Plc said on Wednesday it would not accept the bid.

Several analysts, however, have said they expected the takeover to succeed.

“While this (96%) statistic is interesting and clearly implies low support for the transaction, the offer process only requires a majority if NSF chooses to proceed,” KBW analyst Martin Williams said in a note on the deal.

“Subject to formal regulatory approval if the Offer becomes unconditional, investors may well take a different stance and support the offer as a “fait accompli” allowing things to move on.”

Provident, battling to recover from a string of setbacks, including a botched restructuring of its home credit business, profit warnings and a dividend suspension, maintains the deal is not in the interests of shareholders.

It has raised concerns about the strategic, operational and financial logic of NSF’s offer and its historical dividend payments and share buybacks, prompting NSF in turn to identify errors related to its past payouts.

NSF on Friday also rejected claims by Provident that it would need to raise money when the deal goes through.

It has accused Provident executives of mismanaging the company and laid out a plan for “a brighter future for Provident”, including simplifying the lender by selling one unit and closing another.

Reporting by Noor Zainab Hussain in Bengaluru and Iain Withers in London

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