British subprime lender Non-Standard Finance PLC has decided to withdraw its £1.3 billion hostile takeover bid for rival Provident Financial PLC.
NSF said that following discussions with regulatory authorities, it will allow the offer to lapse as of midnight June 5 because the regulatory conditions for the bid would not be satisfied by that time. NSF also said the combined group would not have sufficient regulatory capital at the deal's completion, with a significant number of minority shareholders not accepting the offer.
NSF said the offer's lapse will not affect its capital or regulatory position going forward, but noted that it expects total fees for the failed deal to reach between £10.0 million and £10.5 million before VAT, which it will book as an exceptional item in its 2019 half-year results. The amount, which is at the lower end of an initial estimated range, will be paid using the company's existing resources.
Meanwhile, Provident Financial said its board believes the lapse of the offer is in the best interests of its shareholders and that it intends to continue delivering strategic initiatives already underway at the company and to generate sustainable shareholder returns.
In May, Provident Financial said independent shareholders — other than Woodford Investment Management Ltd., Invesco Asset Management Ltd. and Marathon Asset Management LLP — holding 96% of its shares had not given their approval for the takeover.
Neil Woodford, the head of investment at Woodford Investment Management, was prompted to block redemptions from a fund that holds a stake in NSF, the Financial Times reported.
The U.K. Competition and Markets Authority previously said it was looking into NSF's takeover bid, as it could result in both NSF and Provident Financial "ceasing to be distinct."