GREEN Flag, the UK's third largest roadside recovery service, after the Automobile Association and the RAC, has been bought from Cendant by Direct Line for £220 million. The acquisition is considered to be an ideal fit for Direct Line, which launched its own vehicle breakdown recovery business last year and like Green Flag, covers the UK and Europe through a network of independent garages.

Sir George Mathewson, chairman of Direct Line and chief executive of the Royal Bank of Scotland, which owns Direct Line, said: 'This acquisition builds value for our shareholders by increasing our presence in a business where we are already the fastest growing major operator. Green Flag is the most efficient and cost-effective operator in the industry. Combine this with the powerful Direct Line brand for consumer direct business and the Green Flag brand for third party business and we make a very strong competitor to the AA and RAC.'

The deal gives the combined companies a market share of 3.3 million customers out of a total of 20 million in the UK, supported by 3,000 garages. The AA tops the league with 9.4 million. Direct Line Rescue, the company's own breakdown recovery service, has attracted 330,000 since its launch in May 1998 by offering premiums 30% lower than its competitors.