Saga and AA to merge

Source: Stock Market Digital

Date :25/06/2007 14:16:47

It was announced today that Saga and the AA would combine to form a new company worth £6.15 billion.

Completion of the transaction, which values the combined Group at £6.15 billion, is subject to regulatory approval. The existing shareholders in both the AA and Saga will be the investors in the new business; this includes a substantial staff and management equity participation.

The two companies will continue to operate in their different and separate fields, but are expected to benefit from the sharing of expertise, with each being able to offer its services to the customers of the other. Saga Chief Executive, Andrew Goodsell, will head up the new company, while the AA CEO, Tim Parker, is expected to leave the group once the transaction is completed.

.Andrew Goodsell said:

“These are two great brands, in different and complementary business areas, but they have many features in common. Both are affinity groups, dedicated to providing high levels of service to a clearly defined market, and to representing the interests of their members and customers. Both organisations can grow and benefit from sharing expertise and systems. We also see great opportunities to offer Saga’s products to the AA’s 50+ members, and the AA’s products to Saga customers. This is a great deal for both brands.

“Both companies have made significant progress under private equity ownership since both were taken over in 2004. Saga has substantially built on its successful strategy of concentrating on people aged 50 and over, increasing sales and customers numbers, and broadening its product range. It has over 2.5 million customers and since 2004 has seen an 80 percent increase in turnover, and a 28 percent increase in the number of people employed delivering services to its customers at home and abroad. The AA has successfully restructured as a full stand-alone company, growing all parts of its business including its insurance broking arm, and its membership base to over 15 million. Both companies enjoy high levels of customer loyalty and satisfaction.

“We have taken a really close look and concluded that that there are significant advantages in combining Saga and the AA’s experience, expertise, systems and negotiating power, while maintaining their separate and very distinct brands and personalities. Saga has an absolute focus on understanding customers and excellence in service, and this fits very well with the AA’s relationship with its members. In combination we can strengthen Saga’s leading position in the 50+ market, and the AA as the pre-eminent organisation for the motorist.”