Non-Standard Finance (NSF), an unsecured credit provider, has proposed to acquire rival UK sub-prime lender Provident Financial in an all-share deal worth around £1.3bn.
Image: Head Office of Provident Financial in Bradford. Photo: courtesy of Gabriel Szabo/Guzelian/Provident Financial plc.
According to NSF, the proposed merger with Provident Financial will establish one of the top UK non-standard finance providers with better positions in credit cards, branch-based lending, home credit and guarantor loans.
The enlarged company can cope up with the evolving requirements of customers across a range of different product categories, claimed NSF.
As per its proposal, NSF offered to exchange 8.88 of its shares for each Provident Financial Share. The proposed transaction values each of Provident’s shares at 511p.
The transaction would result in Provident’s shareholders holding nearly 87.8% of the enlarged NSF Group.
NSF claimed that the transaction has the formal backing of shareholders having more than 50% of Provident’s share capital.
Provident, which was established in 1880, provides personal credit products to the non-standard lending market, through its businesses – Vanquis Bank, Provident home credit, Satsuma Loans and Moneybarn. The company has close to 5,000 employees and serves around 2.5 million customers through its network of branches, call-centers and websites.
On the other hand, NSF was founded in 2014 with an objective to acquire and grow businesses in the UK’s non-standard consumer finance sector. The company boasts of a combined customer base of more than 180,000 from its network of 130 locations in the UK.
NSF revealed its plans to demerge its home credit business, Loans at Home, to assist with the CMA competition approval process and for Loans at Home to be listed for trading on the Main Market or on AIM.
It also plans to streamline the business portfolio post-merger by taking up sale of Moneybarn and either the sale or closure of Satsuma.
NSF founder and CEO John van Kuffeler said: “We have recognised the strong logic and value creation potential of a combination with Provident for some time and hence approached the Provident Board with a proposal in January last year. That approach was rebuffed and since then Provident has further lost its way.
“However, NSF has extensive management expertise and experience, and the correct strategy to turn Provident around and release significant value by combining it with our own fast-growing businesses for the benefit of customers, employees and investors.”