Aviva to sell car-breakdown service firm RAC to Carlyle Group for £1 billion
23 Jun 2011
Aviva Plc has agreed to sell its car-breakdown service and financial-services business RAC to private equity firm The Carlyle Group for £1 billion ($1.6 billion), as part of the UK-based insurer's plan to focus on its core insurance business.
In the deal, announced today, New York-based Carlyle Group won the bidding to buy RAC, the country's second-biggest car breakdown service, after fending off two other rivals, BC Partners and Clayton Dubilier & Rice.
"The sale of the RAC is another important step for Aviva and realises significant value for our shareholders," said Andrew Moss, Aviva's chief executive. "Together with the recent partial disposal of Delta Lloyd, it demonstrates clear delivery of our strategy and provides the flexibility to deepen our presence in the priority markets where we have strength and scale," he said.
Aviva had sold certain units of RAC earlier after acquiring it in 2005 for £1.1 billion. With over 7 million members, RAC operates roadside recovery as well as a claims-management business and provides insurance.
Based in Bescot, Birmingham, RAC has approximately 4,000 employees.
Under the terms of the deal, London-based Aviva - the world's sixth-largest insurance company - will make a one-off contribution of £67 million into the RAC pension scheme, which had a deficit of about £160 million at the end of 2010.
The transaction, which is expected to close at the end of the third quarter of 2011, values RAC at 17 times 2010 net earnings.
