Automobile Association UK Sold for £1.75 Billion

01 July 2004

Centrica, the British energy-to-telecoms conglomerate, has disposed of one of its two major non-core businesses, the Automobile Association, just eight days after announcing the roadside recovery service was up for sale.

The offer Centrica couldn't refuse -- £1.75 billion ($3.17bn; €2.60bn) -- was made by a new unnamed company backed by investment speculators, Permira and CVC Capital Partners, the former a Frankfurt-based private equity company; the latter a European buyout specialist.

AA staff and managers will doubtless be looking over their shoulders in fear that their new owners will pursue the usual slash-burn-sell strategies beloved of venture capitalists.

The AA, founded in 1905, has 13.5 million customers and controls about half the UK roadside repair market. Its revenue rose 5% to £797m last year, while operating profit leapt 27% to £93m, according to Centrica.

Centrica has said it intends to focus on its energy businesses, raiding question marks over the future of its other off-centre asset, telecoms operator OneTel.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff