The AA, Britain’s biggest roadside recovery service, is reportedly subject to a £3bn takeover bid from American investment firm Apollo Global Management (AGM). In August, the AA confirmed that the company was in takeover talks with three prospective bidders as it looks to raise funds to re-balance its books.
The AA said it had traded "resiliently" throughout during the COVID-19 coronavirus pandemic as it “continued to provide an essential service to the community”. It added: “We continue to expect our financial performance this year to be only slightly below that of FY20.”
The talks follow news of the business’s efforts to address its debt, £918 million of which must be repaid within the next two years. It is also considering staying with its current ownership and raising the money itself from shareholders and said that it was unclear whether formal takeover bids would be lodged.
As well as its roadside assistance offering, The AA – floated on the stock exchange in 2014 – also delivers driving lessons and offers motor insurance and vehicle finance.
The business said that its motor insurance operations had performed well in recent months, with a reduced number of claims due to the COVID-19 lockdown.
AA chairman John Leach said: "The AA is a high quality and robust business, with an iconic brand, a resilient business model and a highly committed and loyal workforce.”
Originally founded to warn fellow drivers about police speed traps
The firm, which was founded in 1905 as the Automobile Association, originally began as a group of motor enthusiasts who wanted to warn each other about police speed traps. The Motor Car Act of 1903 had stipulated a speed limit of twenty miles an hour. Motorists found the police forces of the day enforced the new speed limit with such vigour and enthusiasm that the AA called it “tantamount to persecution”.
Membership of the forward-thinking association grew rapidly. By 1907 the group were offering motor insurance, arranged with Lloyds and with no profit going to the AA. By 1912 the association was inspecting hotels, using their now famous star rating. Hotels receiving the star classification were featured in the highly respected Members’ Handbook. From the beginning, hotel inspectors aimed to remain impartial by paying for themselves and accepting no favours. The star system was derived from one used to classify brandy – with a 3-star hotel being defined as a really decent, average middle class hotel.
The first AA telephone boxes made an appearance in 1912. Members were given a special key to open them and could make local calls free of charge.
For the next 100 years the AA continued to introduce services and improvements for motorists, occasionally collaborating with rival organisation, the Royal Automobile Association (RAC) which had been founded even earlier in 1897 and boasted a luxurious members club on London’s Pall Mall.