BREAKING NEWS

BREAKING NEWS

Struggling lender Provident rejects £1.3 billion bid from rival

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(Reuters) - Provident Financial Plc said on Monday it has rejected an unsolicited 1.3 billion pound offer from smaller rival Non-Standard Finance Plc to buy the subprime lender, calling it a "highly opportunistic approach".

"The board considers that this hostile offer represents an irresponsible approach in the context of a financially regulated business which is recovering from a period of substantial instability," Provident said.

Non-Standard Finance (NSF) said on Friday that it proposed to simplify Provident, selling off its vehicle finance arm Moneybarn and divesting or shutting short-term unsecured loans business Satsuma. Provident, however, said the disposals did not make economic sense.

Former Provident boss John van Kuffeler is leading the unsolicited bid to buy the firm where he spent 22 years, but which has run into trouble with regulators worried about the rates it charges on loans.

Provident's share price has fallen 75 percent in the last two years as the company deals with a botched reorganisation of its home credit business that led to profit warnings, the departure of its chief executive officer and suspension of dividend.

The two firms provide short-term loans to consumers who might otherwise struggle to borrow from more mainstream banks, a sector under pressure as lawmakers want to rein in punitive interest rates charged on borrowing by often vulnerable people.

Provident, established in 1880 and based in the northern English city of Bradford, said on Monday that the offer could have a negative and destabilising impact on its stakeholders, including its customers, for a considerable period of time.

"Management team has stabilised the business in a very turbulent period over the past 18 months, which has largely consisted of addressing managerial mistakes of the past, and now has a clear strategy for delivering enhanced returns to shareholders," Chairman Patrick Snowball said.

Provident had begun to show some signs of a turnaround last year after prolonged problems at its door-to-door lending business, but said last month that it expects 2018 earnings to be at the lower end of market expectations, its third warning in 18 months.

NSF, founded only five years ago by van Kuffeler, has a market value of 210 million pounds, but has the backing of several of Provident's shareholders including Neil Woodford, Invesco and Marathon for a proposed turnaround plan.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Bernard Orr and Shounak Dasgupta)

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