British lender Provident Financial has rejected the Non-Standard Finance’s (NSF) £1.3bn takeover offer.

In a statement, Provident Financial said that the offer ‘do not reflect the underlying value and upside potential’ of its businesses.

Calling it a ‘hostile offer’, the Provident Financial board also termed it an ‘irresponsible approach’ to call for an unsolicited bid at a time when the business is ‘recovering from a period of substantial instability’.

It also expressed its disappointment over the failure of NSF to engage with Provident Financial before making the announcement.

Provident Financial takeover bid: Background

Provident and NSF offer short-term loans to consumers who struggle to borrow from traditional lenders. NSF was established five years ago by John van Kuffeler, who was previously  associated with Provident for 22 years.

Last week, NSF made an offer of £1.3bn to acquire the entire issued share capital of Provident Financial.

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The combined firm would have offered home credit, branch-based lending, guarantor loans and credit card services.

At the time of making the announcement, Kuffeler said: “This transaction will create a market leader in the non-standard finance sector with a strong position in all four main segments.

“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.”

As of 31 December 2018, NSF had a total net loan book value of more than £300m. It had a combined customer base of around 180,000 served through 130 locations across the UK.