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| Saga to snap up motoring giant AA | |
| (10 minutes later) | |
| Saga, which sells holidays and other products to the over-50s, is to buy the motoring giant AA in a deal valuing the combined business at about £8bn. | Saga, which sells holidays and other products to the over-50s, is to buy the motoring giant AA in a deal valuing the combined business at about £8bn. |
| The BBC's business editor Robert Peston said the deal, creating a company with more than 11,000 employees, would value the AA business at about £3.4bn. | |
| Private equity firms Permira and CVC bought the AA for £1.7bn in 2004. | Private equity firms Permira and CVC bought the AA for £1.7bn in 2004. |
| But the deal proved controversial after the firm cut 3,000 jobs - equivalent to a quarter of the workforce. | But the deal proved controversial after the firm cut 3,000 jobs - equivalent to a quarter of the workforce. |
| Union campaign | |
| Saga is also owned by a private equity firm, having been bought by Charterhouse for £1.35bn in 2005. | |
| Saga was founded in 1951 as a single hotel in Folkestone, but now has a database of 7.6 million customers and more than 2,500 staff. | |
| Trade unions have led a high-profile campaign against job losses at the AA, which they have cited as an example of what they say is ruthless cost-cutting by private equity firms. | |
| The head of Permira, Damon Buffini, was one of the four leading private equity bosses who appeared before MPs recently to defend the industry's record on managing businesses. | |
| They also defended the amount of tax that private equity firms and their bosses pay. | |
| Our business editor says the deal shows that the business has increased considerably in value, but he adds that the sale is likely to reopen the debate about how much private equity firms make from such investments. |