Bidding war for broker starts as investment relationship comes to an end
Insurers and venture capitalists are circling the AA for a likely swoop in coming weeks, Insurance Times understands.
Speculation has surrounded how the motor broker would develop when its partnership with its venture capitalist owners, CVC and Permira, came to an end. It was widely anticipated that the broker would float on the AIM market, but Insurance Times understands that a close bidding war for the broker is beginning to emerge.
It is understood that AXA and venture capitalist, Kohlberg Kravis Roberts (KKR), are both in talks to take over the broker. Any deal is expected to be worth in excess of £1bn. CVC and Permira's acquisition of the broker in 2004 put the AA's value at £1.75bn.
If AXA were successful it would put the insurer in direct competition with Aviva, which owns the RAC, and Royal Bank of Scotland, consolidating its position as a top three insurance provider in the UK.
One source close to AXA said: "AXA's approach would be much more subtle than Norwich Union. It would be a deal which is not about bolting the AA onto AXA, but about utilising synergies."
KKR tried to purchase the motor broker when it was put on the market in 2004. It narrowly missed out when the AA's former parent, Centrica, sold the company to CVC Capital Partners at the last minute.
One leading motor broker commented: "The AA would be a lucrative deal for any company which could afford it.
"The question is how to push the company forward and grow it organically. An insurer would want to keep the brand."
