AA given takeover talks extension as rivals mull joint bid
Motoring association the AA has been given an extra four weeks to continue negotiations with potential buyers, it was announced today.
The new deadline for its suitors to make an offer for the firm is now 29 September, but there are growing fears that a hotly anticipated bidding war for the company’s stock may be averted.
Last night Sky News reported that two of the candidates to take over the firm were now mulling a joint bid instead.
According to the report, New York private equity house Warburg Pincus has held initial talks with a consortium of Centerbridge Partners and Towerbrook Capital Partners.
It was also reported that the third party, Platinum Equity Advisers, might not submit a bid at all.
In a statement, the AA said: “There can be no certainty that any offer will be made for the company, nor as to the terms on which any offer might be made. A further announcement will be made as appropriate.”
If two of the firms were to pull out of the takeover process, the prospects of a bidding war that would drive up the company’s value would all but disappear.
Shares in the London-listed firm plunged this morning on the back of the reports, dropping 8.8 per cent to 31.5p.
The company sprang a surprise on investors back last month when it announced the potential sale, saying it was taking the step in order to reduce its debt pile.
At the end of the last financial year the group had approximately £2.65bn of total net debt, with £913m scheduled to fall due for repayment within the next two years.
Since listing in 2014, the association has struggled to free itself from its borrowings, and has now decided to pursue an injection of fresh capital.
Platinum Equity Advisers declined to comment. City PM has contacted Warburg Pincus for comment.