AA motoring group in takeover talks with three suitors

The AA says it has received takeover approaches from three parties who are interested in buying the motoring group.

The business, founded in 1905, has £2.65bn in debt and wants to raise funds.

It is also considering staying with its current ownership and raising the money itself from shareholders.

The AA has 2,700 roadside assistance patrol vehicles and also provides insurance and driving lessons.

It said there was no certainty that any of the approaches would lead to an offer.

The possible bidders are Platinum Equity Advisors, Warburg Pincus International, and a joint offer from Centerbridge Partners Europe and TowerBrook Capital Partners.

The AA said it had traded "resiliently" throughout the Covid-19 crisis, and it expected its financial performance this year to be "only slightly below" that of its previous financial year.

Motor insurance has performed well in recent months, as with fewer cars on the road there have been fewer claims.

But the company says it is constrained by its debts. More than a third of its borrowing - £913m - is due for repayment in two years, the company said: "Debt reduction is therefore a key priority and the group continues to... seek to reduce its indebtedness well ahead of the upcoming maturity dates."

The AA has been owned by private equity before, but the company was floated on the stock market in 2014. At their best five years ago, its shares rose to more than 400p, but they fallen since, hitting 15p at their lowest point in April this year.

The news of the takeover approaches sent the AA's shares up 13% to 28p in early trading on Tuesday.

AA chairman John Leach said: "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."