AA asks for extra time to avoid takeover talks breakdown
The AA has been allowed to extend a deadline for two private equity houses to make a bid for the breakdown business by 24 hours after last-minute discussions for a deal failed to lead to a formal offer.
On Monday bosses confirmed they had received a non-binding offer of 35p a share from TowerBrook Capital and Warburg Pincus – two private equity houses.
A deadline set for 5pm on Tuesday for a “put up or shut up” offer, where a binding offer must be made or the suitors must walk away, has now been extended by a further 24 hours.
The move is likely to surprise investors who had been hoping a deal for the breakdown company would end six years of pain as a listed company.
The AA said: “The company remains engaged in advanced discussions with the consortium in relation to the possible offer… There can be no certainty that any offer will be made for the company.”
If the suitors make their offer binding, it would see them invest £380 million into the business to pay off high debts and loan repayments due next year, racked up during over-expansion.
Bosses at AA said they will recommend the offer to shareholders, having announced in May that they had been reviewing ways to support the business’s high debts.
The AA said: “The board believes that the company needs a more sustainable capital structure and requires a significant amount of additional new equity in order to reduce the group’s indebtedness and to fund future growth.”
Suitors had been circling the company since August – despite the Covid-19 crisis seeing fewer journeys being made and limiting AA’s opportunity to offer its services as a result.