The home credit division of Non-Standard Finance (NSF) is to be floated on the London Stock Exchange as an independent company if the £1.3 billion takeover of Provident Financial is to go ahead.
NSF has told the Competition and Markets Authority (CMA) it would demerge the Loans at Home division to avoid competition concerns if the acquisition was to be agreed.
The competition watchdog announced on Wednesday (29th May) that it has opened a preliminary investigation into the proposed merger, inviting both sides to comment to gauge whether a deeper investigation would be required. The CMA said NSF has acknowledged that the merger gives rise to a “realistic prospect” of a substantial lessening of competition in relation to the home credit overlap.
The shares in the demerged Loans at Home would be allocated to the shareholders of NSF, which, post-merger, will include any Provident shareholders that have accepted NSF’s offer as the offer is made on an all-share basis.
“The CMA is inviting comments on whether the proposed demerger would remove the overlap in home credit and remedy the realistic prospect of an SLC that NSF has acknowledged,” a statement said.
However, Provident has continued to deny a take over will take place, M&G Investments has announced that it will reject a takeover of Provident Financial by the rival sub-prime lender. The investment firm owns 1.7% of Provident’s stock, has joined Schroders and Coltrane in confirming it will refuse to back the deal.
In a company statement, M&G said “M&G is supportive of Provident’s current strategy and does not believe that a combination with NSF and subsequent break up of the enlarged group will create value for Provident shareholders.”