(Alliance News) - AA PLC said Thursday it has agreed to a request from the remaining two bidders for the roadside rescue and car insurance provider to make a joint offer.
AA said TowerBrook Capital Partners UK LLP and Warburg Pincus International LLC have confirmed a "strong interest" in making an all-cash takeover offer, acting as a consortium. The pair also would intend to significantly pay down AA's hefty debt pile.
The update on Thursday follows the announcement on Wednesday by Platinum Equity Advisors LLC and Centerbridge Partners Europe LLP that they did not intend to make a takeover offer for AA. Both private equity firms had said talks between them and AA were terminated "by mutual agreement".
In early August, AA confirmed that several parties had made takeover proposals. Each of the three parties had until September 1 to lodge a firm intention to buy AA or make it known it was no longer interested in pursing a deal. The date was then extended to September 29.
The three parties were Centerbridge Partners and TowerBrook Capital Partners, acting jointly, and Platinum Equity Advisors and Warburg Pincus International, acting individually. Centerbridge Partners on Wednesday had confirmed that TowerBrook Capital was continuing to mull making an offer for AA.
AA said Thursday it intends to progress talks with the newly formed bidding consortium of TowerBrook and Warburg Pincus and would make a further announcement in due course, adding: "Notwithstanding any possible offer for the company, the board continues to engage with a number of other parties to assess a range of alternative potential refinancing options, including the possibility of raising new equity."
Back in August, AA said debt reduction was a key priority for the company. AA has net debt of GBP2.65 billion, of which GBP913 million is scheduled to fall due for repayment within the next two years.
Chair John Leach said at the time: "The AA is a high-quality and robust business, with an iconic brand, a resilient business model and a highly committed and loyal workforce. However, in order for us to be able to achieve our full potential, the board believes that it must now prioritise reducing the group's indebtedness to provide the business with the right long-term capital structure - which we hope the current refinancing process will achieve."
AA said it will publish its half-year results on Tuesday next week.
AA shares were up 1.8% in London early Thursday at 28.70 pence. They had fallen 18% on Wednesday and have halved in value in the year so far.
By Tom Waite; thomaslwaite@alliancenews.com
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