Non-Standard Finance (NSF) has made a £1.3billion takeover offer for rival Provident Financial.

NSF said the takeover was backed by more than 50% of Provident’s shareholders, including fund manager Neil Woodford, Invesco and Marathon. Investors must still vote on whether to approve the deal.

John van Kuffeler Chief Executive of Non-Standard Finance said “We have recognised the strong logic and value creation potential of a combination with Provident for some time and hence approached the Provident board with a proposal in January last year. That approach was rebuffed and since then Provident has further lost its way.”

“NSF has extensive management expertise and experience, and the correct strategy to turn Provident around and release significant value by combining it with our own fast-growing businesses for the benefit of customers, employees and investors.”

“The Board also believes that the proposed disposal fails to recognise the strong financial performance of Moneybarn and synergistic benefits with Vanquis, as well as the potentially significant consequences for the Group’s capital structure and funding profile.”

NSF’s van Kuffeler was previously Chief Executive and Chairman of Provident.

On Monday Provident said in a stock market update: “The board of Provident Financial notes the unsolicited offer for Provident Financial announced this morning by Non-Standard Finance. 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.

However later in the day, Provident published a rejection notice said the Board did not believe that disposing of Moneybarn “at this point in the economic cycle would maximise value for shareholders”

Malcolm Le May, Chief Executive Officer of Provident Financial said: “The management team has made substantial strides in restoring stability, improving the company’s regulatory position and enhancing its internal culture with a focus on customer outcomes. This further prolonged period of business and regulatory uncertainty could negatively impact stakeholders, including customers and employees, and is not in the best interests of the Company.”

“We have a clear vision for a financial services group serving the interests of some of the most vulnerable individuals in our society, with a broad product offering and distribution model aligned with changing consumer behaviours and their increasing use of digital technology. At the same time, we are implementing the most up-to-date regulatory standards, which we anticipate will be seen as a blueprint for the Home-Collected and High-Cost, Short-Term Credit sectors.”

“We are focused on executing the clearly defined strategy to restore profitability in CCD, improving growth and profitability in Vanquis, as a well capitalised regulated bank, maintaining the strong performance of Moneybarn and maximising the synergies across the whole group to deliver value for all shareholders.”

In anticipation of a merger, the Competition and Markets Authority (CMA) have announced that there will be a merger inquiry should the sale proceed.