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| Version 4 | Version 5 |
|---|---|
| Saga and AA outline £6bn tie-up | Saga and AA outline £6bn tie-up |
| (about 2 hours later) | |
| Saga, which sells holidays and other products to the over-50s, is to merge with motoring giant AA in a deal valuing the combined firm at £6.15bn. | Saga, which sells holidays and other products to the over-50s, is to merge with motoring giant AA in a deal valuing the combined firm at £6.15bn. |
| 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 £3.3bn. | 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 £3.3bn. |
| 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, and union officials criticised Monday's merger. | |
| Union campaign | Union campaign |
| The deal values Saga, which was bought by private equity firm Charterhouse for £1.35bn in 2005 and had been recently considering a flotation, at about £2.8bn. | |
| Following the deal, Permira and CVC will own 42.5% of the business, while Charterhouse will hold 37.5% and the management and staff of both businesses the remaining 20%. | Following the deal, Permira and CVC will own 42.5% of the business, while Charterhouse will hold 37.5% and the management and staff of both businesses the remaining 20%. |
| DETAILS OF NEW BUSINESS 11,000 staffValued at £6.15bnProfits of £430m17 million members and customers | DETAILS OF NEW BUSINESS 11,000 staffValued at £6.15bnProfits of £430m17 million members and customers |
| 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. | 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. | 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 GMB union said it would seek talks with Saga in an effort to reverse previous job cuts and to improve working conditions for staff. | |
| The union also criticised what it claimed were the large sums set to be made by private equity bosses from the deal. | |
| These are two great brands, in different and complementary business areas Andrew Goodsell, Saga chief executive | These are two great brands, in different and complementary business areas Andrew Goodsell, Saga chief executive |
| "This shows the extent to which we have entered a casino economy," said GMB official Paul Moloney. | |
| "This money was made on the back of 3,500 sacked workers, cuts in the pay of call centre staff, the elongation of the working day for the patrols and a decline in the service to the customers." | |
| AA managers argued the firm's financial and operational performance improved significantly after the 2004 takeover although it saw the business take on more than £1.3bn in debt. | |
| Saga believes it can help the AA sell more financial products | |
| 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. | 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. | 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. |
| Growth plan | Growth plan |
| Saga chief executive Andrew Goodsell will run the combined business following the deal, while AA chief executive Tim Parker is to leave the company. | Saga chief executive Andrew Goodsell will run the combined business following the deal, while AA chief executive Tim Parker is to leave the company. |
| Mr Goodsell said the deal would enable each business to retain its own identity while allowing them to cross-sell insurance and other financial products to each other's customer base. | |
| "These are two great brands, in different and complementary business areas but they have many features in common," Mr Goodsell said. | "These are two great brands, in different and complementary business areas but they have many features in common," Mr Goodsell said. |
| "Both organisations can grow and benefit from sharing expertise and systems." | "Both organisations can grow and benefit from sharing expertise and systems." |
| The headquarters of the combined business will be in Folkestone - where Saga is currently based - but the AA's headquarters in Basingstoke will continue to operate and the two firms' various call centres will remain open. |