The acrimonious £1.3 billion bid from Non-Standard Finance for Provident Financial took another twist on Tuesday when M&G said it is against the deal.
NSF, led by former Provident boss John van Kuffeler, launched a hostile all-share offer back in February with the backing of 50% of investors, which led many to assume it would easily win.
Since then, the battle has been tough. NSF has struggled to win over many more investors. On Tuesday M&G, which has towards 2% of the stock, said it doesn’t back the deal.
It said: “M&G is supportive of PFG’s current strategy and does not believe that a combination with NSF and subsequent break-up of the enlarged group will create value for PFG shareholders, and therefore is not in the best interest of our investors.”
NSF also needs the backing of City watchdog the Financial Conduct Authority and the Competition and Markets Authority. It looks far from certain that either will approve.
M&G’s move follows Schroders, which has a 15% stake and says it will not support the deal.
PF shares today slipped 3p to 450p, well below the 511p offer price, suggesting the City is highly sceptical the takeover will ever go through.
NSF has secured the approval of some major shareholders including fund manager Neil Woodford, Invesco and Marathon, who together hold a 49% stake in Provident and also have shares in NSF.
Last week NSF said it had the support of investors holding 53.5% of Provident’s stock and will continue to pursue a hostile takeover. That is well shy of the backing it had hoped to receive by now. Investors with about 20% of PF’s stock have said they won’t accept the bid.
Provident repeated its claim today that the nil-premium offer is “significantly flawed and value destructive” as it urged shareholders to ignore the bid.
NSF has accused PF of “scaremongering” over the bid and going “to great lengths to deflect attention from its flawed strategy, regulatory breaches, broken promises and underwhelming financial performance”.
Van Kuffeler founded NSF in 2014 after 22 years at Provident as chief executive and chairman. Provident has been in trouble with the FCA over its lending practices in the recent past.
