LONDON: The burgeoning worldwide financial stranglehold of private equity companies was underscored by Monday's merger of two major UK travel services organisations - Saga Group and AA (the quondam Automobile Association).
Both are now controlled by private equity groups: the former by Charterhouse Group of the USA, the latter by Frankfurt-based Permira and London-headquartered CVC Capital Partners.
Given the increasing tide of suspicion and hostility toward the private equity fraternity, it not surprising that the controlling groups adopted an unusually low profile, their names missing from all press releases - even those issued by their own PR agencies.
The deal values the combined group at £6.15 billion ($12.28bn; €9.13bn): the AA at £3.35bn and Saga at £2.8bn. Existing shareholders in the AA and Saga will become investors in the new business, including staff and management of the merged firms.
The combined company will be headed by Saga ceo Andrew Goodsell, while AA chief executive Tim Parker, intends to "pursue new business projects outside the AA" on completion of the transaction - which is subject to regulatory approval.
In adland, the hottest topic associated with the deal is which agency will scoop the jackpot when the two advertising accounts are melded - an almost inevitable outcome given the companies' plan to cross-sell their respective services.
The duo's joint marketing and media spend equates to £73 million. Saga's current $41m budget is split between an in-house operation and three agencies: Carat, Doner Cardwell Hawkins and Target Direct Marketing.
The AA's budget of £32m is spent mainly above the line and its agency roster includes PHD, Delaney Lund Knox Warren, Rapier and Cheeze.
However, an agency review is unlikely to be called until the intended merger passes the point of no return - most likely at the end of this year.
Data sourced from multiple origins; additional content by WARC staff
