AA to merge with Saga to form £6.15bn company
BRITAIN’S largest motoring organisation, the AA, and Saga, are to merge to form a new £6.15 billion company.
The AA, which has around 15 million members and interests in insurance broking, publishing and a driving school, and Saga, which provides insurance, financial services, holidays, cruises, magazine publishing and other products all targeted at people aged 50 and over, made a surprise joint announcement on Monday (June 25).
The transaction values the AA at £3.35bn and Saga at £2.8bn. The existing shareholders in both the AA and Saga - the AA is owned by private equity companies Permira and CVC and Saga is owned by Chaterhouse - will be the investors in the new business, which includes a substantial staff and management equity participation.
The two companies will continue to operate in their different separate fields, but are expected to benefit from the sharing of expertise, with each being able to offer its services to the customers of the other.
Saga chief executive Andrew Goodsell will head up the new company, while the AA chief executive officer Tim Parker, has signalled his intention to pursue new business projects outside the AA, and has left the organisation.
Goodsell said: ‘These are two great brands, in different and complementary business areas, but they have many features in common. Both are affinity groups, dedicated to providing high levels of service to a clearly defined market, and to representing the interests of their members and customers. Both organisations can grow and benefit from sharing expertise and systems. We also see great opportunities to offer Saga’s products to the AA’s 50+ members, and the AA’s products to Saga customers. This is a great deal for both brands.’
Completion of the transaction is subject to regulatory approval. (AA: June 25).