Over 50s travel and insurance provider Saga has announced it will merge with the Automobile Association in a £6.2bn deal, quashing plans for a stock market flotation.
The deal is being orchestrated by three private equity houses, Charterhouse, Saga’s owner, and the AA’s owners Permira and CVC Capital.
The new holding company, which is as yet unnamed, will be 37.5 per cent owned by Charterhouse, a 42.5 per cent stake will be owned Permira and CVC and management will hold the other 20 per cent.
The three private equity houses will take out £2bn in dividends as part of a complex refinancing deal.
Saga chief executive Andrew Goodsell says: “We have taken a really close look and concluded that there are significant advantages in combining Saga and the AA’s experience, expertise, systems and negotiating power, while maintaining their separate and very distinct brands and personalities.
“We also see great opportunities to offer Saga’s products to the AA’s 50+ members, and the AA’s products to Saga customers. This is a great deal for both brands.”