AA’s biggest investors in conflict over private equity firms’ £218m offer for the debt-ridden breakdown firm
A battle over the AA’s future has broken out after its two top shareholders took opposite sides on a £218million bid for the breakdown firm.
In what has been billed as a rescue deal, private equity businesses Warburg Pincus and Towerbrook Capital have offered 35p per share for the troubled business and help with tackling its £3billion debt mountain.
But hedge fund Albert Bridge, the AA’s top investor, has come out against the ‘derisory’ bid and is urging others to do the same.
On the table: Private equity businesses Warburg Pincus and Towerbrook Capital have offered 35p per share for AA
It has put it on a collision course with the AA’s board and Davidson Kempner, another hedge fund, the second-biggest shareholder, which support the takeover.
The two investors appear to be spoiling for a fight, having ramped up their stakes in the AA over recent days, in what will be seen as manoeuvring to gain more leverage.
Davidson Kempner increased its holding from 3.2 per cent to 16.1 per cent, while Albert Bridge’s holding has risen from 18 per cent to 20 per cent since August.
The showdown has left the deal – which needs 75 per cent shareholder approval – hanging in the balance as both sides seek to rally others behind them.
Albert Bridge claims the bid by Warburg and Towerbrook undervalues the AA, which was valued at 250p per share or £1.4billion when it floated in 2014.
As part of their proposal, Warburg and Towerbrook are offering a further £380million to help tackle the AA’s £2.7billion debts.
Otherwise the company faces punishing repayments on bonds due in 2022.
AA chairman John Leach claimed the takeover is ‘in the best interests of the AA, its shareholders and wider stakeholders’