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.
Subscribe to 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”.
-
The top stocks in the FTSE 100After a year of strong returns for the UK’s flagship index, which FTSE 100 stocks have posted the best performance in 2024?
-
A junior ISA could turn your child’s pocket money into thousands of poundsPersuading your child to put their pocket money in a junior ISA might be difficult, but the pennies could quickly grow into pounds – and teach them a valuable lesson about money
-
India's stock market drops - why it's thrown investors into frenzyNifty 50, India's stock market index, has dropped 8% from a September record amid concerns of an economic slowdown and foreign investors pulling out
-
Warren Buffet invests in Domino’s – should you buy?What makes Domino's a compelling investment for Warren Buffet's Berkshire Hathaway, and should you buy the UK-listed takeaway pizza chain?
-
UK equities are set for a bull market – buy nowInvestors shouldn’t wait for a crisis to buy UK equities, says Max King. Do so now, in the expectation of much better returns in due course
-
How to find top-quality income picks in the UK stock marketFour top-quality UK stock market picks according to Iain Pyle, manager of Shires Income Trust
-
4Imprint makes a strong impression – should you buy?4Imprint, a specialist in marketing promotional products, is the leader in a fragmented field
-
Invest in Glencore: a cheap play on global growthGlencore looks historically cheap, yet the group’s prospects remain encouraging
-
How to save the dying UK stock marketThe UK stock market is in long-term decline. To fix that, we must first recognise why equity markets exist and who they should serve
-
Bargain British stocks with long-term potentialThree British stocks with plenty of long-term potential, according to Ian Lance, co-manager of Temple Bar Investment Trust
