The AA has accepted a £219m cash takeover offer from private equity groups Towerbrook Capital and Warburg Pincus.
Shareholders in the roadside recovery business will receive 35p per share as a result of the takeover. The private equity firms plan to inject £380m into the business to help reduce its debt pile of £2.6bn as part of the deal.
AA chair John Leach said: “Having carefully considered the range of options available to the AA including the terms of the proposed acquisition by the consortium, the AA board has concluded that the acquisition, which offers certain cash value to the AA’s shareholders as well as a significant equity injection to reduce indebtedness, is in the best interests of the AA, its shareholders and wider stakeholders.”
The £380m injection would be used to support the refinancing of £541m of loan notes maturing in July 2022 and £372m of notes maturing in January 2022.
The AA has felt the weight of a heavy debt burden for the past few years. It was owned by the private equity groups CVC and Permira until its stock market flotation in 2014 with debts of £3bn.
TowerBrook and Warburg Pincus added: “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.”