NSF caves to shareholder pressure and ditches Provident bid

Lapsed deal happens in the shadow of Woodford flagship fund suspension

Funds face challenging search for independent directors

Non-Standard Finance (NSF) has abandoned a £1.3bn hostile takeover bid for Provident Financial after mounting pressure from shareholders, despite the deal being backed by the doorstep lender’s biggest investors Neil Woodford and Invesco.

NSF, which had been trying to scoop up Provident since February this year, said it had decided to rescind its offer after realising it would not be able to shore up enough support to push the deal over the line by the deadline at midnight on 5 June.

Holders of 21.6% of Provident shares, including Schroders and M&G Investments, had publicly rejected the takeover bid by NSF.

And on Tuesday Janus Henderson joined the growing chorus of dissenting shareholders, with head of governance and responsible investment, Anthony Marsden, telling Provident chairman Patrick Snowball the fund group would not relinquish its 3.4 million shares in the FTSE 250 consumer credit firm.

But Woodford and Invesco were seen to have the upper hand, collectively owning 45.75% of shares in the doorstep lender, double the size of the opposing shareholders. The duo also owns over 53% of NSF, which puts them on both sides of the deal.

Following the news, shares in Provident shot up some 15% to 513p.

NSF chief executive and former Provident boss John van Kuffeler was “very disappointed” that customers, employees and shareholders would not now benefit from “our transformation plan to build a brighter future by combining Provident with NSF”.

“I wish to thank our shareholders for their support and all of NSF’s staff and self-employed agents for their continued dedication. NSF will continue to focus on delivering value to its customers, employees and shareholders by providing a helping hand to the 10-12 million UK consumers that are either unable or unwilling to access mainstream credit.

“Each of our businesses has a top three position in its respective market segment and we believe each is capable of delivering attractive long-term returns for NSF shareholders through a combination of capital and dividend growth.”

Timing with Woodford suspension coincidental

The timing of NSF’s withdrawal is curious, happening days after the gating of Woodford’s flagship fund and the media maelstrom that followed.

But Willis Owen head of personal investing Adrian Lowcock puts this down to pure coincidence as the deadline for NSF to satisfy the offer expires tonight.

“This [outcome] was largely expected as there had been quite a battle between the companies as well as shareholders of Provident Financial.”

Jason Hollands, managing director of Tilney, added that the support required to proceed with the delisting was “not just a simple majority,” requiring 75% of holders to approve.

Lowcock added: “The outcome might make it easier for Woodford when restructuring his portfolio as the two stocks just default back to their respective listings.”

Provident Financial was the fourth largest holding of the Woodford Equity Income fund at 4.81% at the end of April while NSF made up 0.64% of the portfolio.

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