Competition watchdog studies Non-Standard Finance’s hostile bid for Provident

A review into Non-Standard Finance’s £1.3 billion hostile takeover bid for doorstep lending rival Provident Financial has been launched by Britain’s competition watchdog.

The Competition and Markets Authority (CMA) confirmed it is considering whether the deal would lead to a substantial lessening of competition.

It is also examining Non-Standard Finance’s plans to demerge its home credit business and whether this would address potential competition concerns.

The CMA is now asking for comments by June 12 and is set to make a decision on July 23.

It comes ahead of a deadline on June 5 for the offer to be declared wholly unconditional.

Non-Standard Finance (NSF) has already acknowledged the merger would lead to reduced competition in the home credit sector and has put forward plans to demerge its home credit business, Loans at Home, to address this.

Having filed the plans with the CMA, NSF said it believed a “de-merged Loans at Home will be independent of NSF, and continue to be a viable and effective competitor for home credit, especially given its strong market position as the UK’s third largest provider of home credit”.

NSF’s group chief executive John van Kuffeler, who is the former boss of Provident Financial, added: “We remain confident in the merits of our offer and the benefits it will bring for Provident, its customers, employees and shareholders.”

But on Tuesday, another shareholder in Provident – M&G, which owns a 1.7% stake in the group – said it would not back NSF’s £1.3 billion offer to buy the credit company.

M&G said in a letter that it does not believe the move will benefit shareholders, as the battle for control rumbles on.

Asset manager Schroders, which holds a stake of around 15% in Provident, has also publicly said it will not support the takeover.

NSF tabled the bid with backing from 50% of investors but said it wanted to get 90% of shareholders to support the offer.

NSF has secured the backing of some of its major shareholders including investment guru Neil Woodford, Invesco and Marathon, who together hold a 49% stake.

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.

Provident said that approximately 20.2% of shareholders have publicly stated that they do not intend to accept the offer.