Breakdown in addition to roadside recovery service, the AA, looks like it’second heading for a takeover that volition value the society at merely xiv per cent of the fellowship’s marketplace capitalisation when it was floated back in 2014.
35p Per Share
The board of the AA is fix to recommend a deal whereby Warburg together with Pincus together with Towerbrook Capital volition pay only 35 pence per percentage for the historic firm.
That’second a long fashion from the 250 pence per share at which the AA floated its stock half dozen years agone.
But although the overall £218m cost seems similar corking value for a house that was in one case worth £one.4 billion together with counts three meg members amongst its client base of operations, the novel authorities is taking on a company that is battling heavy debts.
In fact, the debt for the AA totals £2.65 billion as well as the takeover grouping is expected to pass £380 meg on refinancing that debt.
The 35p figure volition be a disappointment to about shareholders that had been hoping for more, in addition to shares roughshod by ii per cent on the word of the impending purchase.
But the expected offering is yet significantly amend – to the melody of about xl per cent – than the recovery business firm’second value dorsum inwards the summer, before the word of a possible sale emerged.
In a argument, the AA said:
“The board believes that the company needs a more sustainable upper-case letter structure and requires a significant amount of additional new equity inward lodge to cut back the group’s indebtedness and to fund future increment.”
“The board, having considered carefully the viability of a range of choice potential debt in addition to equity refinancing options together alongside its fiscal advisers, has indicated to the consortium that it would be willing to recommend a cash offer on the damage of the proposal.”
“Accordingly, the company is engaged inwards advanced discussions amongst the consortium in relation to the possible offer.”
In its results for the first one-half of 2020, published inwards September, the AA reported pre-taxation profits of £26 1000000.
This is a drop of well-nigh forty per cent. The AA blamed the slump inwards function on less traffic on the roads due to the coronavirus pandemic.