Slaughter and May is set to receive over £6m in fees after advising sub-prime lender Non-Standard Finance (NSF) on its failed £1.3bn takeover of doorstep lender Provident Financial, which collapsed on Tuesday night (4 June) due to insufficient regulatory capital and a lack of shareholder support.
The mandate for Slaughters was led by corporate head Andy Ryde alongside fellow partner Paul Mudie, with the hostile bid being launched in February of this year. However the Prudential Regulation Authority decided the combined entity would not carry sufficient capital at the point of completion, and therefore blocked the deal. Slaughters did not advise the client on capital or shareholder-related issues.
While Slaughters is receiving the lion’s share of the fees, NSF’s bankers are set for a smaller sum, with Deutsche Bank and Ondra set to be paid just over half a million pounds. KPMG advised on financial regulatory issues. The failed takeover aw NSF’s share price yesterday (5 June) drop to 42p.
Shareholders who collectively own more than 50% of Provident, including Woodford Investment Management, Invesco and Marathon Asset Management, were initially in favour of the February bid following a series of profit warnings from chief executive Malcolm Le May. However, this support seemingly waned after the bid became public.
The takeover breakdown adds to a complex history between Slaughters, Provident and NSF. Provident had historically been a client of the Magic Circle firm, with Slaughters having advised the company while it was chaired by current NSF chief executive John van Kuffeler. The relationship between Kuffeler and Slaughters continued after Kuffeler set up NSF in 2015.