AA and Saga could go separate ways as owner explores options

Acromas, the debt-laden owner of motoring organisation the AA and over-50s insurance and travel firm Saga, has hired accountants Ernst & Young to explore options for the business, which serves more than 18 million consumers in the UK.

The move raises the prospect that Acromas will be broken up in order to return cash to its private equity backers, including Charterhouse and CVC.

The AA, which dates back to 1905 and has 16 million members, is worth about £5bn while Saga could fetch up to £4bn, reports said.

The business was formed through a £6.1bn merger deal at the height of the credit boom in 2007 that was funded by £4.8bn of debt.

Unlike other debt-fuelled deals at that time, Acromas has managed to reduce its debt mountain while most of the cash borrowed to finance the takeover does not have to be repaid until 2015.

In full-year results published in July, Acromas said it was still looking at a stock-market flotation of the whole group.

The business, whose other brands include motoring 
school BSM and Titan Travel, grew turnover by 15 per cent to £2.1bn in the year to January while earnings improved four per cent to £592m.

Its 38,000-strong workforce is led by chief executive Andrew Goodsell.

Kent-based care home giant Saga has almost 18,000 carers.

In 2010/11 Acromas spent 
almost £250m on buying 
Nestor Healthcare and Allied Healthcare.

Last year it also invested £65m in Saga Sapphire, the new flagship for its cruise business.