Aviva agrees to sell RAC for �1bn
Aviva has agreed to sell RAC to the Carlyle Group for �1bn, claiming that the deal is part of its new strategy of focusing on a dozen core markets.
The insurance firm began searching for a buyer for the UK's second largest breakdown recovery firm earlier this year but had refused to publicly comment on its plans.
Aviva has owned the company since 2005 when it made a successful takeover bid of �1.1bn.
The sale to global asset management business Carlyle still needs to pass regulatory and competition approval, but would value the RAC at 17 times its 2010 net earnings.
Andrew Moss, group chief executive of Aviva, said: 'The sale of RAC is another important step for Aviva and realises significant value for our
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clear delivery of our strategy and provides the flexibility to deepen our presence in the priority markets where we have strength and scale.'
As reported in the EDP yesterday, there were three firms still in the running at the beginning of the week; Carlyle, Clayton Dubilier & Rice and BC Partners.
A fourth firm, Bain Capital, had withdrawn from bidding in May.
The sale is part of Aviva's strategy for focusing on core products in just a dozen countries around the world.
It claims that the proceeds, which will be held as cash on the balance sheet, will enhance liquidity and further strengthen Aviva's balance sheet.
This will allow the firm to further invest in its core markets.
Ties between the companies will remain, as Aviva will continue to underwrite RAC's motor insurance and market its breakdown services to its own customers.