Fleet News

AA up for sale as Centrica seeks funds

ROADSIDE assistance group the AA is up for sale, parent company Centrica has confirmed.

The UK's largest gas supplier, which has owned the company for five years, has confirmed that it is in 'preliminary negotiations' to sell the AA.

The move is part of its aim to increase its utility assets, the company said.

A Centrica spokesman said: 'There have been changes in the energy market, with sharp rises in gas and electricity wholesale prices, which are ongoing.

'We have always covered a proportion of supplies from our own gas and electric production plants, with about 20% to 25% coming from our own sources, but we need to increase this proportion. We want to increase the gas and electric production assets that we own.'

Centrica completed a £1.1 billion purchase of Fleet News award winner the AA in 1999 with a promise to plough millions of pounds of new technology and services into the breakdown company.

At that time, of 4.4 million eligible AA members, 67% voted on whether to sell, with 97% giving the green light. (Fleet NewsNet, September 1999).

The Centrica spokesman said: 'The AA has been very good. We bought it five years ago and have improved its performance. Roadside customers are up from 9.5 million to 13.5 million. Profit is now £93 million and we have invested significantly. We paid £1.1 billion in 1999 and now it is worth much more.'

The impending sale fits into Centrica's sales and acquisition strategy. Last year, the group sold financial services and credit card group Goldfish to Lloyds TSB and it has made several acquisitions within the utility sector.

The AA, which secured best breakdown company in this year's Fleet News awards, declined to comment on the proposed sale.

The sale announcement came amid rumours that rental giant Northgate was also set to be sold to GE Capital, owner of rival rental firm TLS.

But a spokesman for Northgate said no approach had been made.

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