The takeover of Provident Financial, parent company of subprime lender Moneybarn, by Non Standard Finance is to be investigated by the Competition and Markets Authority (CMA).

In February this year Provident Financial Group rejected a £1.3bn bid from Non-Standard Finance, calling it an “irresponsible” approach. In a process that will end on June 12 this year, the CMA has opened an ‘invitation to comment’ from relevant parties on the matter. According to a statement from the CMA:

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“[This body] is considering whether it is or may be the case that the merger, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the UK for goods or services.”

The deadline for a decision on the issue by the CMA is July 23 2019.

John van Kuffeler, the founder and group chief executive of Non Standard Finance, is the former chief executive officer of Provident Financial. Of the hostile takeover bid he said: “We remain confident in the merits of our offer and the benefits it will bring for Provident, its customers, employees and shareholders.”

According to reports in City AM, shareholders of around 20.2% of Provident shares have said they do not intend to accept the bid. However, Non Standard Finance lowered the level of acceptances it needed to push forward with its takeover plans from 90% to 50%.

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Investors Neil Woodford, Invesco and Marathon have given support to the offer since its inception and together own more than half of both Non Standard Finance and Provident.

Last month Fitch reissued Provident Financial as a ‘BBB-‘ credit rating, the lowest investment grade classification on the scale, while noting the positive performance of its motor finance and credit card businesses.

In March Moneybarn revealed a 28.3% increase in profit before tax to £28.1m for the 12 months to 31 December 2018.