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Gloucestershire Business News

AA agrees £219m takeover deal

The AA has agreed to a £219m takeover with the new owners pledging to inject extra cash into the iconic brand.

A consortium of private equity groups Towerbrook and Warburg Pincus will take control of the company in a deal that is likely to complete early in 2021.

A statement from the AA said the Consortium recognised the core strengths of the AA lie in its iconic brand, market-leading positions, and skilled and committed workforce.

However, the Consortium believes that the AA has been held back as a result of underinvestment and high levels of debt.

The Consortium intends to inject additional funds into the AA to deleverage the business and provide it with the operational freedom to drive the business forward, to better serve its customers and capitalise on its considerable strengths.

It believes the AA needs committed, long-term owners to support the growth of the business and to invest in critical areas such as IT transformation which in turn, will generate new and better opportunities for customers.

The Consortium believes the Insurance business will be a key growth driver, to enable attractive new products and services to be made available to the AA's loyal membership base.

In areas such as driving schools and financial services, the Consortium believes there are opportunities to better serve the membership with new products and services from a brand that is held in very high regard and trust by consumers.

Commenting on the acquisition, John Leach, Chair of the AA, said: "The AA is a great company with a long and illustrious heritage, a highly respected brand and committed employees providing a high-quality service to its members and customers.

"In recent years, under new management, the AA has made strong progress with strategic and operational improvements and is demonstrating resilient trading performance through Covid-19."

A statement from the TowerBrook and Warburg Pincus Consortium said: "We are delighted that this investment will safeguard the future of a much-loved business. The AA has a proud heritage but has struggled to reach its full growth potential in recent years.

"By deleveraging this fundamentally high-quality organisation, the business will be able to fully capitalise on its iconic brand, its market-leading positions, and its skilled and committed workforce - so that it can continue to deliver the exceptional levels of service it provides to customers across the country.

"We have no doubt that, on a stronger financial footing, the AA will go from strength to strength, to the benefit of all stakeholders."

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