British insurer Aviva on Thursday announced the sale of its roadside rescue division RAC to private equity firm Carlyle for £1 billion ($1.60 billion, 1.12 billion euros), as the group seeks to focus on insurance products.
“Aviva plc announces that it has agreed to sell RAC Limited, the second largest UK roadside assistance provider, to The Carlyle Group for £1.0 billion,” it said in an official statement. The deal, which is expected to be completed at the end of the third quarter of 2011 and is subject to competition and regulatory approvals, is part of Aviva’s strategy to focus on insurance and savings businesses in priority markets.
Aviva bought RAC for £1.1 billion pounds in 2005 — but it has since offloaded divisions including RAC France, the BSM motoring school and Auto Windscreens. RAC, which is based in Birmingham in central England, employs 4,000 staff and has more than seven million customers. Pre-tax profits stood at £82 million in 2010.
The group’s 1,800 patrol vans, painted in distinctive orange and silver, attended 2.5 million rescue breakdowns in Britain last year. “The sale of RAC is another important step for Aviva and realises significant value for our shareholders,” added Aviva Chief Executive Andrew Moss in the statement. “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.”
Back in 2009, Aviva floated 42 percent of Dutch subsidiary Delta Lloyd in an initial public offering in Amsterdam, and further trimmed its stake earlier this year. Aviva is Britain’s second-biggest insurer after Prudential, and is the sixth biggest global player, with more than 53 million customers and 45,000 employees worldwide. Under the terms of the deal, meanwhile, Aviva will pump £67 million into the RAC pension fund, which had a deficit of £160 million at the end of 2010.
London, June 23, 2011 (AFP)
