Travel, insurance group and Automobile Association to merge

26 June 2007

UK-based travel and insurance services provider to those over 50, Saga Group Ltd, and the 102-year old auto breakdown services provider, Automobile Association Ltd (AA), announced a surprise merger on Monday, 25 June.

The deal values the two closely held companies at £6.15 billion (approximately Rs50,177.85) — Saga at £2.8 billion and the Automobile Association Ltd at £3.35 billion.

The companies said in a statement that the deal will enable Saga to offer policies and cruises to AA''s older customers while the AA would sell roadside assistance to Saga''s 2.5 million clients.

Saga will now abandon its plans for an initial public offering, three years after it was grabbed by leveraged buyout firm Charterhouse Capital Partners LLP, from under the nose of a rival private equity consortium of Candover Partners Ltd., Cinven Ltd. and J P Morgan Partners LLC, now CCMP Capital Advisors LLC.

Nearly three months ago Charterhouse brought in the investment bank Close Brothers Group plc to look at ownership options and prepare for a possible initial public offering later this year.

The announcement also comes almost three years after private equity firms, Permira Advisers LLP and CVC Capital Partners Ltd, acquired Automobile Association from energy group Centrica (formerly a part of British Gas) for £1.75 billion in July 2004 in a bitter battle in which New York''s Kohlberg Kravis Roberts & Co. was considered a top contender.