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Non-Standard Finance still confident on its hostile bid for Provident

By Noor Zainab Hussain and Tanishaa Nadkar

(Reuters) - The CEO of UK subprime lender Non-Standard Finance (NSF) said on Friday he was still confident the group's 1.3 billion pound hostile takeover bid for bigger rival Provident Financial would succeed but declined to say whether it would increase its offer.

Provident last month rejected the bid launched by NSF, whose Chief Executive John van Kuffeler is a former CEO of Provident, saying it was looking for a better solution to turn around its business.

Van Kuffeler said on Friday that the deal made commercial sense.

"(I) feel just as positive as the day it (the offer) was launched, if not more so, because we see the operation synergies and the opportunity to enhance shareholder value in both companies," he told Reuters in a phone interview.

"I can't comment on whether we (will) increase the offer or not but we put out a really good offer out there. It's not so much the value or the offer, but the value of both companies put together," he said.

Van Kuffeler was speaking after NSF reported a pre-tax loss of 1.6 million pounds ($2.09 million) for 2018, down from a pre-tax loss of 13 million pounds in 2017 and helped by a bigger loan book.

Provident's stock was 2.9 percent lower at 557.7 pence at 1458 GMT, still significantly higher than NSF's offer which valued each Provident share at 511 pence.

"We think NSF will have to 'concede' on certain terms – though we suspect it is unlikely that NSF will need to sweeten the actual terms to get this deal across the line," Goodbody UK Financials analysts said in a note.

NSF brought forward the results release, which had been due out next week. The Goodbody UK Financials analysts said the move was to highlight better-than-expected numbers to both sets of investors before Provident reports annual results next week.

NSF's shares were up 1 percent at 60 pence.

Since its problems began in 2017, Provident's share price has tumbled more than 55 percent, hit by a botched reorganisation of its home credit business which led to profit warnings, management changes, regulatory issues and the suspension of dividends.

NSF had proposed simplifying Provident, selling two units and demerging NSF's Loans at Home unit.

On Wednesday, Provident again urged investors to reject the takeover bid and said it had a clear plan to map out growth and enhance performance across its divisions.

NSF on Thursday received a letter from Britain's financial watchdog indicating that any changes to the business model of Provident would need to comply with requirements relating to the provision of high-cost credit.

Canaccord Genuity analyst Portia Patel said NSF's offer was the best option for Provident, with no rival bidder in sight.

"Since a white knight is yet to emerge, certainly feels like the momentum is with the current deal on the table," Patel said.

Both companies 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.



Non-Standard Finance looks to bulk up with Provident buy - https://tmsnrt.rs/2EVCcsS


VANQUIS BANK: JEWEL IN THE CROWN

Provident, established in 1880 has said it will focus on growing its banking business.

Patel said Provident's Vanquis Bank was attractive to NSF, which lacks a credit card business.

"Anybody who looks to acquire - who would look at Provident - would see that Vanquis is the jewel in the crown," she said.

NSF's offer has the backing of investors Neil Woodford, Invesco and Marathon, which hold stakes in both firms.



(Reporting by Noor Zainab Hussain and Tanishaa Nadkar in Bengaluru; Editing by Bernard Orr/ Susan Fenton and Emelia Sithole-Matarise)