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The Limits of Public Relations

Two things this week, at least, that might be classed as PR clangers.

First, the ongoing Neil Woodford farrago, which I discussed here yesterday.

Second, the sudden collapse of Non-Standard Finance’s hostile bid for Provident Financial.

Woodford clearly needs some extra PR help, and my bet is that he’s about to get some.

On NSF, well the flaks have cause for some embarrassment, but I think we perhaps shouldn’t be too harsh.

The PR-ing on this takeover had it as a done deal right from the start. After all, they had more than 50% of investors on board even before they announced the bid.

One of those was Neil Woodford, which turned out not to be such a bonus, but still, it would be waived through, we were assured.

Those of us who expressed scepticism were dismissed. But selling loans to poor folk is not the same as selling shoes, we said. Regulators might have severe reservations. We were entitled to our opinion, but wrong. So they said.

In the end the deal fell over simply because shareholders didn’t like it.

They were being offered a nil-premium, all-share deal that ended up being priced at a discount to the prevailing Provvy share price. Hardly compelling.

And because of that there was a capital shortfall. Which meant the regulator didn’t like it either.

All the PR in the world wasn’t going to change those facts. The unfair side of PR, I think, is that flaks get blamed for others’ mistakes.

On the other hand, they are perfectly happy to take credit for others’ successes, so we can keep our sympathy to an absolute minimum.


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