New owners could bolster insurance arm to boost growth
Saga could ramp up its insurance arm after its sale for £1.35bn to a management consortium backed by private equity house Charterhouse.
Sources said the figure paid for the over-50s holiday and insurance company was "steep".
"With the majority of its profits coming from the insurance arm the new management may have to look at some radical restructuring to get more growth or profitability," one observer said.
Saga's owner Roger De Haan decided to sell the company rather than float it after nearly six months of negotiations.
Charterhouse is understood to be financing the deal with £880m of debt provided by Lehmann Brothers, HBOS and Merrill Lynch, a loan note of around £400m and the remainder in equity.
De Haan, 55, will get a cash payment of around £1.1bn and staff at the Folkestone-based company will share a cash windfall of around £15m, which should result in an average of £5,000 each.
De Haan said: "There has been enormous interest in this business from both private equity and public markets.
"It has been a very close-run decision between the two options, but we feel that a management buy-out, supported by Charterhouse, is in the best interests of the shareholders, employees and customers."
Earlier this year Saga reported profits of £80m on a turnover of £380m.
