AA shares plunge after suitors pull out of race
Two suitors eyeing a takeover of debt-laden breakdown company the AA have pulled out of the race three weeks after a deadline for bids was extended - sending shares plunging.
Platinum Equity and Centrebridge Partners both said they have walked away from talks with the AA's board, in a move that could potentially leave just one consortium bidding for the embattled former FTSE 250 business.
Shares fell 17pc to 28p, valuing the company at just under £180m. The stock has fallen 93pc from its peak in 2015.
The AA stunned the City at the start of August by confirming reports of private equity interest, saying it was in talks with three potential buyers.
Last month it emerged that one bidder, Warburg Pincus, was speaking to an allegedly rival consortium led by Centerbridge and Towerbrook Capital Partners about combining forces rather than launching rival offers.
The Telegraph reported last month that another supposedly interested party, US buyout fund Apollo, was understood to be focused on refinancing some of the AA’s near £2.7bn debt pile as opposed to making a swoop for its shares.
Finding a buyer has proven more difficult than first hoped for the company, and a deadline set by the Takeover Panel earlier this month passed without any bids arriving. This forced AA to ask for an extension, with the new deadline set at Sep 29.
The AA floated in 2014 after previous ownership by private equity firm Acromas. But it has struggled to pay down a colossal debt mountain that dwarfs its stock market value of less than £200m, and was also hit by a scandal in 2017 when chairman Bob McKenzie was sacked following a punch-up at a team away day in the five-star Pennyhill Park hotel.
The AA said it was also assessing a range of other potential refinancing options when it announced the takeover talks.
Analysts say that the company’s most pressing problem is refinancing more than £550m of bonds falling due in 2022.
US investor Platinum reserved its right to make or participate in a possible offer for AA within six months. This will only happen with the agreement of the AA's board, if a rival bid is made.
