Warburg Pincus and TowerBrook offer 35p a share in non-binding proposal for debt-laden company
The AA has been speaking to potential bidders since the summer, as it seeks to bring in cash ahead of repayment deadlines on a large portion of its £2.6bn debt.
One main sticking point in the talks has been the announcement by the UK’s Financial Conduct Authority in September of a new ban on charging existing insurance customers more than new clients for home and motor cover. That would hit the AA’s insurance business, which it operates alongside its roadside recovery operations.
Like other UK insurers pondering the impact of the FCA announcement the AA would have to apply cost optimisation to offset the impact of not being able to offer lower prices to new customers. Customer acquisition costs will rise so other costs must be reduced without compromising
The AA’s board has told two private equity groups it would be willing to accept a proposed 35p-a-share offer for the heavily indebted roadside recovery group, it said in a statement on Monday.