The “debt-laden” AA is likely to be taken back into private-equity ownership, says Julia Kollewe in The Guardian . The motoring group has indicated that it is inclined to recommend a £218m takeover proposal from TowerBrook Capital Partners and Warburg Pincus.
The deal would involve the two private-equity groups paying 35p a share while investing £380m to help reduce its huge debt pile of £2.6bn, £913m of which is due to mature in the next 18 months.
The deal would also see Rick Haythornthwaite, a former chairman of British Gas owner Centrica, becoming AA’s chairman. The offer price of 35p, will “disappoint” shareholders given that it is pitched “only slightly above” the AA’s 33p-a-share price, says Kaye Wiggins and Daniel Thomas in the Financial Times.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Still, it is a lot more than the 25p the shares were trading at in August before the AA announced that it was in talks with buyout groups. Shareholders who bought into AA when it was first floated in 2014 at 250p and held on may be angry that they stand to lose 85% of their investment, says Ben Marlow in The Daily Telegraph.
However, “one wonders what they were doing”, buying shares when the company “careered” onto the stockmarket six years ago. After all, it arrived “with £3bn of borrowings”, the result of a pre-float refinancing that “handed its owners a £2.6bn dividend just as they were preparing to leap out of the driver’s seat”. This meant that the management was forced to focus on cost-cutting at a company “already starved of investment”.
-
Inheritance tax pension reforms will delay payments to grieving families and the taxmanThe government is pressing ahead with plans to charge inheritance tax on pensions but there are warnings that it will be harder for executors to administer an estate and pay HMRC
-
More than a million pensioners set to be hit by tax on savings accountsA combination of higher interest rates and frozen tax thresholds is dragging more people into paying tax on their cash savings
-
Albert Einstein's first violin sells for £860,000 at auctionAlbert Einstein left his first violin behind as he escaped Nazi Germany. Last week, it became the most expensive instrument not owned by a concert violinist
-
Who is Rob Granieri, the mysterious billionaire leader of Jane Street?Profits at Jane Street have exploded, throwing billionaire Rob Granieri into the limelight. But it’s not just the firm’s success that is prompting scrutiny
-
Emerging markets boast top-quality growth stocks at bargain pricesOpinion Lim Wen Loong, investment director at Ashoka WhiteOak Capital, selects three growth stocks where he’d put his money
-
Beware the bubble in bitcoin treasury companiesBitcoin treasury companies are no longer coining it. Short this one, says Matthew Partridge
-
Klarna leads a financial revolution – should investors buy?Klarna has ambitions to rewire the global payments system and has huge growth potential
-
New faces don’t solve old problems – why strategy also matters when it comes to investment trustsOpinion Changing managers often fails to boost a trust’s performance, says Max King
-
How to profit from silver’s record riseSilver often lets investors down, but there may now be room for further gains, says Dominic Frisby
-
Are venture-capital trusts worth investing in?Venture-capital trusts are a tax-efficient way to invest in early-stage companies. But are they worth the risk?
