AA receives £218m offer to end six years on the stock market

The AA has received a £218m offer for the business, which means the breakdown group will leave the stock market after six troubled years as a listed company.
The AA provides breakdown coverThe AA provides breakdown cover
The AA provides breakdown cover

Private equity firms, TowerBrook Capital and Warburg Pincus, have been holding discussions with the AA for nearly a month and said they would offer shareholders 35p a share.

AA listed on the London Stock Exchange in 2014 at a price of 250p a share, but this soon plunged and it is seen as one of the poorer attempts by a company to cash in on a stock market listing.

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The deal will see the new owners invest £380m in the business to pay off high debts and loan repayments due next year, which were racked up during over expansion.

Directors at the AA said they will recommend the offer, which must be formalised by the end of Tuesday, having announced in May they had been reviewing ways to support the businesses 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.”

The AA said the deal would equate to a 40 per cent premium to its closing share price on August 3.

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Suitors have been circling the company since August, despite the Covid-19 crisis seeing fewer journeys being made and limiting the AA’s opportunity to offer its services as a result.

Previous talks with Centerbridge Partners Europe and Platinum Equity Advisors broke down, but TowerBrook and Warburg Pincus stepped in last month.

However, some shareholders are concerned the new owners may walk away from the deal following weeks of speculation and no sign of an offer and a deadline extended three times.

AA was one of the most high profile listings in 2014, with armchair investors keen to buy into a company which was founded in 1905 and remains a household name.

The previous owners pumped the firm full of too much debt and a swift listing price of 250p jumped to 450p a share, before plummeting and never fully recovering.

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