Provident fights back in £1.3bn takeover tussle
A WAR of words has erupted between the doorstep lender Provident Financial and its former boss John van Kuffeler as he mounts a £1.3bn hostile takeover bid.
The Provvy has accused van Kuffeler of destroying shareholder value and failing to grasp modern technology.
‘The offer is not in the best interests of Provident’s shareholders and should be firmly rejected,’ it said. ‘The offer has major strategic flaws.’
But van Kuffeler, who ran the Provvy for 22 years and is now leading a bid by his new company Non-Standard Finance (NSF) to buy it, said these criticisms were laughable, adding: ‘Their board doesn’t understand the sector.’
NSF has already secured the backing of three major shareholders who own almost 50pc of the Provvy’s stock, and are also invested in NSF.
If he wins control, van Kuffeler will sell the car finance arm Moneybarn and sell or shut its online payday lender Satsuma.
Provvy shares have fallen more than 70pc in the past two years after an IT upgrade went wrong, making it impossible to collect debts. It also revealed regulatory probes over mis-selling claims at Moneybarn and its credit card business, Vanquis Bank. Hitting back at van Kuffeler’s plans the Provvy said it has made major progress in resolving mis-selling claims, and plans to sell Moneybarn are flawed because they will rob investors of a source of dividends.
The Provvy put Vanquis at the heart of its defence, saying it has clear growth plans for the business and that NSF would struggle with the tough regulations the division faces. The Provvy said NSF shares have dropped repeatedly after it bought companies, and its own IT issues are now fixed. Provvy boss Malcolm Le May said it needed to move beyond its traditional reliance on face to face doorstep lending.
He said: ‘What’s changed in the past five years since John left the business is the pace of technology has evolved enormously.
‘It’s just a different world. The average age of a home collections customer is 57, if you go back 20 years it was probably 35.
‘Life has just moved on and I don’t think they grasp that.’
When asked about a letter which van Kuffeler had sent to staff promising to bring the firm back to its roots, Le May, a senior independent director at the firm during its problems who took charge last November, said: ‘He can write what he likes.’
In response, NSF said the Provvy was not putting forward new proposals to boost shareholders’ returns. It said: ‘Nothing has changed. The NSF board believes that the announcement simply tells long-suffering Provident shareholders that they will get more of the same from an inexperienced team.
‘The only hope offered by Provident seems to be that they “will explore all appropriate alternatives”, which the NSF board believes is nothing more than a plea to save themselves from the problems that their current chief executive has overseen.’
Van Kuffeler, 70, dismissed claims his firm did not understand technology.
He said: ‘It’s completely laughable. In the same period where they’ve caused their divisions to be under special measures, we have built a business in the exact same sector.’
Provvy shares fell 0.8pc, or 5p, to 594.8p yesterday and NSF shares dipped 1.8pc, or 1.1p, to 59.8p.