Provident Financial shareholder Schroder's rejects NSF bid

8th May 2019 08:04

(Sharecast News) - Subprime lender Provident Financial's major shareholder Schroders rejected a hostile takeover bid for the firm from Non-Standard Finance.Schroders, which currently holds a 14.6% stake in Provident, turned down NSF's £1.3bn bid on Wednesday, stating the deal risked destabilising the outfit's recovery and brought about "a number of operational and regulatory challenges" and uncertainties."PFG has faced a number of issues in recent years, but the Q1 trading statement shows that it is on track with its recovery and rehabilitation," said Schroders.Other major shareholders, Woodford, Invesco and Marathon indicated they would back the deal.Elsewhere, Provident told investors that a look into NSF's financial statements had given it further cause for concern, stating that it had identified an undercapitalisation of the enlarged group which may require a capital raise.Provident said its review had found "significant headwinds" facing NSF's business and an overly "positive perspective" despite having reported statutory losses since its inception."The Provident board has serious concerns about the underlying financial and operating performance of NSF and whether the current market capitalisation is a true reflection of the fundamental value of the NSF Group," said the FTSE 250 constituent."With respect to both capital and profits, the Provident board believes that the conclusions presented here make it even more apparent that NSF's offer, if successful, would benefit NSF by mitigating its own weaknesses with Provident's strengths, resulting in a materially weaker pro-forma combination for Provident Shareholders."As of 0830 BST, Provident shares had inched forward 0.51% to 508.59p.