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Three private equity groups eye AA takeover, company considers share issue

Three private equity groups eye AA takeover, company considers share issue

British roadside recovery group AA has received three cash takeover offers from private equity groups, it said on Tuesday, but is also considering selling fresh equity as it tries to slash its debt pile.

LONDON British roadside recovery group AA has received three cash takeover offers from private equity groups, it said on Tuesday, but is also considering selling fresh equity as it tries to slash its debt pile.

The three bidders are Centerbridge Partners Europe and Towerbrook Capital Partners acting together, Platinum Equity Advisors and Warburg Pincus, AA said in a statement.

News of the offers sent small-cap AA’s shares up as much as 23% at the market open before trading 11.4% higher at 28.8 pence at 0720 GMT.

Each of the bidders said they would inject a “significant amount” of new equity capital into the group, the AA said.

But the AA, which was started by motoring enthusiasts in 1905 and is known for its distinctive yellow vehicles, said it was also weighing other options including a share issue.

The firm has 2.65 billion pounds ($3.46 billion) of total net debt, of which 913 million pounds is scheduled for repayment in the next two years.

“Debt reduction is therefore a key priority and the Group continues to…seek to reduce its indebtedness well ahead of the upcoming maturity dates,” it said.

The AA’s previous private equity owners brought it to the stock market in 2014 but the shares have performed poorly, hitting record lows of 15 pence in April.

AA offers insurance as well as roadside assistance.

Motor insurers have done comparatively well during the coronavirus pandemic as government lockdowns have led to reduced claims.

Finnish insurer Sampo and South Africa’s Rand Merchant Investment are in talks to buy British motor insurer Hastings, the two insurers said last week.

($1 = 0.7653 pounds)

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