General Insurance Article - AA plc announces proposed sale of AA Ireland for €156.6m


The AA announces today that it has entered into an agreement to sell its Irish business and operations comprising AA Ireland Limited and its subsidiaries to Carlyle Cardinal Ireland Fund, L.P. (CCI) and Carlyle Global Financial Services Partners II, L.P., (CGFSP) for a cash consideration payable at completion of €156.6m (the "Transaction"). AA Ireland provides insurance intermediary services and motoring services to private individuals and corporate entities in Ireland.

 The transaction is subject to approval by the Competition and Consumer Protection Commission in Ireland and by the Central Bank of Ireland as a result of the change to the ownership of a regulated insurance broker business and is expected to complete in late July 2016. Pursuant to the terms of the transaction, AA Ireland will have ongoing use of the AA brand.

 The AA has also agreed to provide certain transitional services to AA Ireland and will retain responsibility for the defined benefit pension plan of AA Ireland. 

 As at 31 January 2016, AA Ireland had generated profits before tax of €12m and had gross assets of €163m. The executive team of AA Ireland, led by its CEO Brendan Nevin, will invest in AA Ireland alongside Carlyle.

 As an insurance broker-led business, AA Ireland differs significantly from the AA’s UK business, and synergies and potential cross sell opportunities are limited. AA Ireland and the AA will enter into a long term Ongoing Services Agreement which will preserve the current trading arrangements between the AA and AA Ireland for the benefit of both groups. The AA intends to use the net cash proceeds for partial repayment of its debt.

 The AA will continue to focus on its transformation into the UK’s pre-eminent membership services organisation, and on delivering shareholder value supported by its strong financial position, including its high level of cash generation.

 Bob Mackenzie, Executive Chairman of AA plc, said: "After a competitive process, we are very pleased to have reached agreement to sell AA Ireland. We believe that this is a good result for our shareholders and for AA Ireland and its employees.

 “I would like to thank our 450 Irish colleagues for their dedication, professionalism and service to our customers, which has resulted in the creation of a great business. I am confident that the agreement with Carlyle and CCI presents an exciting opportunity for their continued success."

 Dean Street Advisers acted as advisers to the AA on the transaction.
  

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