Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

UK competition watchdog raises questions about NSF-Provident merger

Published 29/05/2019, 08:06
Updated 29/05/2019, 08:06
UK competition watchdog raises questions about NSF-Provident merger

UK competition watchdog raises questions about NSF-Provident merger

(Reuters) - Britain's competition watchdog said on Wednesday it was considering whether Non-Standard Finance's (NSF) hostile takeover of rival doorstep lender Provident Financial (LON:PFG) would result in a substantial lessening of competition.

The watchdog also confirmed NSF had offered to demerge its home credit business as part of the deal but raised questions over whether it would be truly independent after a proposed demerger.

The Competition and Markets Authority (CMA) had said in February that the two doorstep lenders would have to hold off from integrating after any deal, to protect staff and customers while it considers the market impact.

NSF, which is controlled by funds who also own just over 50 percent of Provident, earlier this month dropped its efforts to get the bulk of the rest of the company's shareholders to back its 1.3 billion pound bid for Provident.

Management at Provident, established in 1880 and based in the northern English city of Bradford, have stood their ground against the bid.

The two companies provide short-term loans to consumers who might otherwise struggle to borrow from mainstream banks in a sector under pressure from lawmakers seeking to rein in punitive interest rates charged on borrowing by often vulnerable people.

The CMA indicated in its statement that NSF was proposing Loans at Home would be demerged and then relisted on the stock market, with shares allocated to the shareholders of NSF.

It said that meant that the shareholders in the enlarged NSF and Loans at Home would be the same and questioned whether the proposed demerger would therefore remove an overlap in home credit.

NSF said in a separate statement that Loans at Home, the UK's third largest provider of home credit, would be independent of NSF, adding that it expects an agreement in principle to be reached with the CMA.

"NSF has acknowledged to the CMA that there is a realistic prospect of a significant lessening of competition in relation to home credit and has identified a clear cut remedy," NSF said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.