Non Standard Finance (NSF)

[monabri]

https://www.londonstockexchange.com/exc ... 98500.html

"Sub-prime lender Non-Standard Finance has made a firm offer for peer Provident Financial, valuing Provident at around GBP1.3 billion.

The all-share merger will see Non-Standard Finance give 8.88 of its own shares per Provident share, valuing Providence's shares at around 511 pence each. Provident closed at 511.40p on Thursday, so there is no premium to the takeover proposal. "

So far, shareholders worth over 50% of Provident have indicated they will accept the deal, including Woodford, Invesco, and Marathon.

I'm surprised that Mr Woodford accepted the deal.

[Dod101]

monabri is one who seems to indulge himself with unsubstantiated comments. Why is he surprised that Mr Woodford has accepted the deal. Would he like to say? I have no interest in the transaction personally but like to keep abreast with what is going on.

My comment is made because the same monabri claimed that PHP were overpaying for MedicX, again without any further comment. Such comments are in my opinion worthless unless he can provide some explanation. As it is, I hold PHP and the share price has recovered the modest fall at the time the merger was announced.

Dod

[monabri]

Short of personally interviewing Mr Woodford, I took the Alliance News on the LSE announcement at face value. My "surprise" that he ( well, his fund, Woodford) is reportedly in favour of the deal stems from the level of support, share ownership level, and involvement in the running of PFG. I expected him to be keen to hold on for a share price recovery.

With regard to MedicX (MXF) the deal valued it at quite a premium to the valuation based on future cash flows ( the forecast earnings for MXF being quite negative for the next 3 years).

[mike]

A few links regarding this

FT link via google
https://www.google.com/search?client=firefox-b-d&q=Provident+Financial+gets+%C2%A31.3bn+offer+from+Woodford-backed+rival

Non-Standard Finance — founded by John van Kuffeler, Provident’s chief until December 2013 — has launched an all-share offer valuing Provident shares at 511p each, based on NSF’s closing price of 58p on Thursday

RNS from NSF (nothing from PFG yet)
https://www.investegate.co.uk/non-standard-fin--nsf-/rns/firm-offer-by-nsf-plc-for-provident-financial-plc/201902220700058443Q/

Dividend policy and potential for shareholder distributions - given Provident's recent financial performance and operational shortcomings, the NSF Board will need to review its dividend policy shortly following Completion. However, the NSF Board intends that future dividend payments to shareholders of the Enlarged NSF Group will, over time, reflect its stated policy of paying out at least 50 per cent. of normalised post-tax earnings. This is subject to discussions with the PRA in respect of the restrictions currently imposed on the payment of dividends from the Vanquis business. NSF also intends to distribute to shareholders of the Enlarged NSF Group any excess capital arising from the expected improvement of Provident's capital efficiency and the proceeds of any sale of Moneybarn and/or Satsuma, subject to the outcome of discussions with lenders to the Enlarged NSF Group. NSF's final year dividend for the financial year ended 31 December 2018 is expected to be in line with its stated policy and to be paid to existing NSF Shareholders with a record date prior to Completion.

[mike]

PFG have now responded with their RNS.

Response to Offer by Non-Standard Finance plc for Provident Financial plc

The Board of Provident Financial plc ('Provident Financial 'or the 'Group') notes the unsolicited offer for Provident Financial announced this morning by Non-Standard Finance plc ('NSF').

The Board's considered response to the offer will be announced in due course. In the meantime, shareholders are strongly advised to take no action in respect of the NSF offer.

https://www.investegate.co.uk/provident-fin-plc---pfg-/rns/response-to-offer-for-for-provident-financial-plc/201902221026418771Q/

PFG's annual results are due for release on Wednesday next week, 27 February

[Dod101]

Thanks monabri.

It seems surprising that these substantial shareholders have so readily accepted the offer, assuming of course that Alliance News is correct. It does not give the Provident Board very much to say. It also suggests that the institutional shareholders have got fed up of PF in a big way and are glad to see some other management coming in. I do not hold.

Dod

[PinkDalek]

Allianz News usually regurgitate what is in the original RNS.

Woodford, Invesco and Marathon have given irrevocable undertakings to accept the Offer and letters of intent to accept (or procure acceptance of) the Offer in respect of, in aggregate, over 50 per cent. of Provident's issued share capital.

From https://www.londonstockexchange.com/exc ... 78048.html

[Gengulphus]

Woodford, Invesco and Marathon have given irrevocable undertakings to accept the Offer and letters of intent to accept (or procure acceptance of) the Offer in respect of, in aggregate, over 50 per cent. of Provident's issued share capital.

It's worth noting the first condition listed in the RNS's appendix 1:

The Transaction is conditional on, among other things:

· valid acceptances of the Offer being received in respect of not less than 90 per cent. of the Provident Shares to which the Offer relates;

So those irrevocable undertakings do not yet make it a done deal, though they certainly go a long way towards doing so.

It may also be worth noting that this condition is the same as the condition under which NSF will be able to compulsorily purchase any remaining shares whose holders have not accepted the offer - i.e. it looks as if NSF is saying that they want literally 100% of the company or none of it, with no possibility that they'll be left with minority shareholders to deal with. This impression is reinforced by the fact that I haven't located anything saying that they reserve the right to reduce the 90% percentage, which is often present in takeover offers, but have located something saying that they reserve the right to do it instead by a scheme of arrangement, which is the other way that an offeror can guarantee acquiring literally 100% of the company or none of it. (But this is just an impression, not a hard fact - one can miss things when searching a substantial document!)

Gengulphus

[monabri]

The tail is wagging the dog ( Market Cap of NSF £180m, PFG £1295m).

Have they simply lost faith in the management of PFG and decided to place it back under NSF's John van Kuffeler's guidance with his knowledge and experience of having managed PFG previously?

Both Woodford and Invesco already own large chunks of NSF ( I know nothing about the third party mentioned above, Marathon).

[Raptor]

Moderator Message:
Have merged the 2 threads on same subject. Raptor

[Gengulphus]

Not having any financial interest in this offer myself, I'd rather lost track of it - but I see there's been quite a battle of RNSes about it. So as I've been catching up on it out of interest's sake after being reminded of its existence by a HYP Practical post, I thought I'd post the list:

22/02/2019: NSF makes the offer, claiming "over 50%" support in the form of irrevocable undertakings and letters of intent
22/02/2019: PFG's initial "we've seen it - more to follow" response
25/02/2019: PFG's more considered response, rejecting the offer and advising "take no action" to shareholders (*)
25/02/2019: NSF respond to PFG's response
06/03/2019: PFG updates shareholders and expands on its reasons for rejecting the offer and NSF respond
07/03/2019: NSF release the text of a letter they'd received from the FCA about regulatory matters
07/03/2019: PFG say they've taken note of the FCA letter
08/03/2019: NSF's 2018 results
09/03/2019: NSF announce availability of the offer document and PFG respond in short and long form
14/03/2019: NSF announce publication of their annual report and some supplementary information about the offer
25/03/2019: PFG announce publication of their response document, which NSF takes note of and responds to
26/03/2019: NSF announces that it's got approval from its own shareholders for the offer
13/03/2019: PFG releases its final results
02/04/2019: NSF updates to say it's now got actual acceptances for more than 50% of the PFG shares, which PFG responds to (corrected version) and NSF in turn responds to that (also a corrected version)
12/04/2019: NSF admits to some "technical infringements" alleged by PFG, but says they don't matter
15/04/2019: Takeover Panel announces offer extended to allow a decision to be made about whether to refer it to the Competition & Markets Authority
16/04/2019: PFG repeats their rejection of the offer, saying the "technical infringements" do matter, and NSF responds
29/04/2019: NSF announces that the closing date of the offer has been revised to May 15th, saying that is the last date that the offer can be declared unconditional with respect to acceptances.
01/05/2019: PFG presses their point about the "technical infringements" and for answers to other questions they have asked
03/05/2019: Trading statement from PFG
07/05/2019: NSF comments on PFG's trading statement and urges acceptance of their offer
08/05/2019: PFG releases a letter from Schroders saying they're not accepting the offer and again argues against the offer, on the basis of NSF's financial position and concerns about the Competition & Markets Authority process
10/05/2019: PFG says that 96% of "Independent Shareholders" have not accepted the offer (clarified version) and NSF responds to various earlier points made by PFG
13/05/2019: NSF makes further responses to earlier point made by PFG
14/05/2019: PFG tightens their estimate of how much the offer will cost them
15/05/2019: NSF decide to lower the acceptance condition to 50% of the PFG shares plus 1 share and so declare the offer unconditional with regard to acceptances (**) and PFG respond
20/05/2019: PFG releases a short statement from Schroders confirming their position is unchanged

I have not listed RNSes from organisations other than NSF and PFG about the size of their shareholdings, etc (of which there are many), nor the various updates from NSF about revised letters of intent (intentions can change, and have to about the number of shares they intend to accept the offer for if their owner sells shares), nor minor normal routine announcements by either company.

(*) Note that accepting the offer and taking no action about it (in particular, not accepting it) are basically the only options for shareholders in a 'traditional' takeover offer like this one - there is no "reject the offer" action they can take other than refusing to accept it.

(**) Note that the revised acceptance condition is the minimum allowed by the Takeover Code and this was the last day NSF could do this.

Gengulphus

[Gengulphus]

From the HYP Practical post I linked to above - I'm posting this reply here because it's relevant to all PFG shareholders, not just the HYPers among them:

... with the NSF bid dead line looming next week 23/05/19, ...

I presume that's a deadline supplied by your broker, since it's decidedly earlier than the earliest deadline I believe NSF have given (29/05/2019 in the offer document). The 6-day difference is at the long end of what I would expect a broker to allow itself to collate the responses they've obtained from their clients and pass the results on to the company registrar, but probably not so far above what they should be able to achieve to justify a complaint IMHO.

The deadline in NSF's offer document has an "(unless extended)" condition. The timetable was extended (see the 15/04/2019 RNS in the list in my last post), apparently by a week (judging by NSF's 29/04/2019 RNS), which would push the deadline for NSF to declare the offer wholly unconditional out to 05/06/2019 - and if your broker doesn't extend their deadline similarly in due course, I really would feel a complaint was justified.

Likewise for any further extensions - which is relevant because the 15/05/2019 announcement by NSF saying that they'd made the offer unconditional as to acceptances says:

Continuation of the Offer

The Offer will remain open for acceptance until further notice and for at least seven calendar days following the date on which the Offer becomes or is declared unconditional in all respects. In any event, not less than 14 calendar days' notice will be given in respect of the closure of the Offer.

The important points are:

* Your acceptance or not of the offer will no longer make any difference at all to whether NSF actually go through with the offer: they will if the other conditions of the offer are all satisfied or waived, and otherwise they won't. Unless your shareholding is a lot bigger than I would expect around here, it of course never was going to make more than a microscopic difference to whether the acceptance condition had been satisfied - but now the acceptance condition has been satisfied, it won't make even that much difference.

* If NSF doesn't go through with the offer, due to its other conditions not all being satisfied or waived, your acceptance or not of the offer won't make any difference to anything.

* If NSF does go through with the offer, due to its other conditions all being satisfied or waived, your acceptance or not of the offer will make the obvious difference to whether it is applied to your shareholding or not - but you will get 14 days notice of when your ability to accept the offer finally runs out provided you pay attention to what NSF is saying in RNSes. Your acceptance or not won't make any difference to whether the offer is applied to the holdings of other shareholders who have accepted the offer (as it definitely will be applied to them in this case), but can make a difference (though again a microscopic one) to whether it is applied to the holdings of other shareholders who haven't accepted the offer - this is because if the acceptance level reaches 75%, NSF will become able to delist PFG (making continuing to hold PFG shares decidedly unattractive to most shareholders) and if it reaches 90% (measured in a slightly different way), NSF will be able to compulsorily purchase the remaining PFG shares.

Note that the last point applies equally well in reverse - if all the other conditions are satisfied or waived, and you decide not to accept the offer, other shareholders' decisions about accepting or not accepting the offer may well end up affecting whether you can keep your PFG holding or end up having to either sell it, accept the offer or have it compulsorily purchased (which would have the same eventual effect as accepting the offer). The other shareholders may well include big ones, so those differences may well not be microscopic - e.g. if Schroders were to change their position about hanging on to PFG shares, that would probably make quite a big difference... In the case of a nominee holding, what your broker's terms & conditions say about how they'll deal with such situations might well end up being relevant as well, and so might ISA regulations if they're held in an ISA.

I can't make the decision about accepting or not for you, of course - but the only way I can see the decision having to be made this week is if something happens this week that persuades NSF to abandon the offer before the remaining conditions are all satisfied or waived, and if that were to happen, your decision wouldn't make any difference to anything anyway! In all other cases, NSF's commitment to 14 days' notice (which I believe they're obliged to make under the Takeover Code) will keep pushing the deadline out until they do give that notice.

Gengulphus

[IanSmithISA]

Good morning,

I have been watching this since the announcement and now that the offer has been withdrawn and NSF have squandered about £10.5 million in fees I wonder if the offer was ever really seriously expected to succeed?

Instead I wonder if it was intended to bring NSF to the attention of PFG shareholders and get PFG to buy parts of NSF?

As far as I can see NSF has not been the success that might have been hoped for. So selling the Branch Based Lending and Guarantor Loans business to PFG and floating the Home Credit business off as a new company to a new owner seems like a reasonable way of getting out.

The home credit business has only £41 million of loans, whereas the branch network has £186 million and the Guarantor Loans £83 million.

PFG doesn't have a branch network, and Satsuma isn't that big a player in Guarantor Loans with about 122,000 customers so both of these may be welcome.

Bye

Ian