AA on the right road as £219m acquisition set to "safeguard the future"
A British motoring association has today announced that it is on track to be acquired in a deal worth more than £200m.
AA, which provides roadside assistance and services across the country, has agreed on terms of a recommended cash acquisition by Bidco, a consortium of Towerbrook Funds and the Warburg Pinkus Funds.
If approved by shareholders, the deal would see Bidco pay approximately £219m for the business, at 35p per share.
Bidco said that if the deal goes ahead, it intends to inject additional funding into AA, focusing on IT and financial services.
John Leach, chair of the AA, commented: “The AA is a great company with a long and illustrious heritage, a highly respected brand and committed employees providing a high-quality service to its members and customers.
“In recent years, under new management, the AA has made strong progress with strategic and operational improvements and is demonstrating resilient trading performance through Covid-19.
“On 4 August 2020 we announced that the AA was in discussions with a number of parties in relation to a wide range of potential refinancing options, including the possibility of raising new equity.
“As a result of these discussions, the AA subsequently received a proposal from the consortium in respect of an all-cash offer for the AA alongside a significant new equity injection.
“Having carefully considered the range of options available to the AA including the terms of the proposed acquisition by the consortium, the AA board has concluded that the acquisition, which offers certain cash value to the AA’s shareholders as well as a significant equity injection to reduce indebtedness, is in the best interests of the AA, its shareholders and wider stakeholders, and as such is unanimously recommending the acquisition to shareholders.”
The TowerBrook and Warburg Pincus Consortium said: “We are delighted that this investment will safeguard the future of a much-loved business.
“The AA has a proud heritage but has struggled to reach its full growth potential in recent years.
“By deleveraging this fundamentally high-quality organisation, the business will be able to fully capitalise on its iconic brand, its market-leading positions, and its skilled and committed workforce - so that it can continue to deliver the exceptional levels of service it provides to customers across the country.
“We have no doubt that, on a stronger financial footing, the AA will go from strength to strength, to the benefit of all stakeholders.”
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