Today Aviva has announced that it has agreed in principle to acquire RAC at a price of 925p per share representing a total value for RAC of £1.25 billion (including £140 million of acquired debt). The Board of RAC believes that this offer is in the best interests of RAC's shareholders and recommends that they accept the offer. The offer is subject to shareholder and regulatory approval.
Today Aviva has announced that it has agreed in principle to acquire RAC at a price of 925p per share representing a total value for RAC of £1.25 billion (including £140 million of acquired debt). The Board of RAC believes that this offer is in the best interests of RAC's shareholders and recommends that they accept the offer. The offer is subject to shareholder and regulatory approval.
Commenting on the news, Andy Harrison, chief executive of RAC plc, said:
"This acquisition will help to accelerate our growth, particularly in Financial Services which is one of our biggest strategic opportunities. The offer represents a significant premium to our recent share price reflecting the success of RAC and the strength of our brands - this is a testament to the commitment and contribution of all our colleagues in RAC."
Recent highlights:
- In recent years, RAC has delivered strong organic growth by leveraging the strength of its brands and customer base. RAC has:
- grown underlying profits by 12% per annum over the last 3 years and continuing sales by 8% per annum over the same period
- generated strong cashflow with debt reduced to £140 million by December 2004
- achieved an increase in Total Shareholder Return of 63% over 3 years and 189% over 5 years
- grown dividend by 6% per annum in 2004 and 2005
- achieved a share price rise of 44% from 516p to 742p over 3 years, and 123% from 333p over 5 years
- won major outsourcing contracts on the B2B side including BA, MoD and Ford
- In October 2004, RAC made a major strategic step with the £40 million AXA transaction by which it gained full control over the brand in financial services and significantly increased the scale of the business. This opened up our biggest financial and strategic opportunity.
- In 2004, RAC was widely recognised for its excellence in customer service, winning more awards than ever before
- JD Power No. 1 in Roadside Service - as voted by its customers
- Won at the Fleet Excellence Awards: Service Supplier of the Year, and best in driver training (BSM), accident management (RAC Business Solutions), vehicle leasing (LVL), fleet software (RAC software solutions), and vehicle recovery (Roadside)
- One of the major factors behind this success has been the improvement in colleague satisfaction which has risen to record levels
- Since 1999, RAC has refocused on its growth businesses with the sale of around 20 business for total proceeds of approximately £350 million
- RAC was bought for a net consideration of approximately £320 million in July 1999 by Lex Service Plc which was later renamed RAC plc
RAC Consumer Services:
The RAC brand is one of the most trusted in the UK. We give peace of mind to millions of customers through our 24-hour roadside and replacement windscreen services, our range of motor, legal and home insurance products and advice on personal injury claims. In BSM, we are the market leader in driving tuition, providing training to 157,000 pupils each year from beginners starting on our unique simulators to experienced drivers requiring advanced skills for business or personal use. Consumer Services has grown steadily over recent years and now contributes over half the Group's operating profits.
RAC Business Services:
We have strong business to business credentials through our Lex and RAC's brands and provide extensive vehicle and customer services including roadside assistance, motor claims handling, contact centres, fleet management, vehicle finance, supply chain management and vehicle distribution and sales. Our customers include the Ministry of Defence, British Airways, Norwich Union, Ford, and Audi. We provide support and service around the clock 365 days a year.
Ends
For further information:
Neil Lovell
RAC plc Corporate Communications Director
07768 298636
Anita Scott/ Nigel Prideaux
Brunswick Group LLP
020 7404 5959
With 7 million members, RAC is one of the UK's most progressive motoring organisations and the first choice provider for both private and business motorists. Whether it's roadside assistance, windscreen repair and replacement, learning to drive, vehicle inspections, legal and financial services or up-to-the-minute traffic and travel information - RAC is able to meet all motorists' needs.
RAC was ranked the top roadside rescue and recovery company in the J.D. Power and Associates 2004 UK Roadside Assistance Study SM. Study based on responses from 23,641 owners and drivers of 51 and 02 registered vehicles who required roadside assistance. www.jdpower.com