A club whose name is worth pounds 450m

Click to follow
The Independent Online
THE remarkable rise and rise of the RAC continued yesterday. Founded by the prolific inventor Frederick Simms more than a century ago, it has risen to become a distinctly British marque at the end of the millennium.

It is for its "brand" that US concern Cendant paid pounds 450m. The American giant only last month gobbled up Britain's car parking empire and the nation's third largest motoring organisation Green Flag. Putting these elements together, Cendant will have now nearly more than 45 per cent of the breakdown market.

Industry insiders said the RAC sale was likely to be referred to the Office for Fair Trading as it would see two entities - the new RAC and AA - holding more than 90 per cent of market.

What many will also bemoan is the loss of another great British institution. Taking its cue from the conversion of major building societies to banks, the RAC decided to sell up. The reason, say its managers, is that it will be able to fund ambitious plans.

Executives at the RAC have long been concerned that the motoring organisation would not have the money to invest in new technology - such as electronic mapping - that it would need in the near future. As the motoring organisation makes only pounds 10m profit on pounds 250m of sales, it executives were never likely to be able to realise their dreams.

So feelers were put out 28 months ago - the proposed sale attracted much interest. More than 20 bidders from the UK and overseas expressed desire. But none could match the pounds 450m laid on the table by Cendant.

When the RAC's motoring services pass into American hands, 12,000 full members of the club will get windfall payments of up to pounds 35,000.

This nearly doubles the amount on offer from Jeffrey Rose, the RAC's former chairman. His final act was to write to all the full members saying that "professional advisers" had valued the stakes at "a sum of pounds 20,000". None of this will be of concern to the 5.8m members of the RAC's breakdown service - who will get nothing in cash.

Full members of the club, for a pounds 620 signing-on fee and another pounds 600 a year, can swim in the central London RAC club or play golf at Woodcote Park country club, near Epsom, Surrey.

Under the board's plan they will see a 2,800 per cent increase in their investment.

Among members expecting a windfall from the proposed takeover are motor racing champions Nigel Mansell and the actor Richard Wilson.

The RAC insisted that its name would carry on and that there would be improved services - but no extra cash.

Members of the Pall Mall club will vote on the deal at the company's annual meeting next month and it is hoped the acquisition will be concluded by the end of the summer.

The Queen is the patron of the RAC, while the president is Prince Michael of Kent. Other full members include the gossip columnist Nigel Dempster, the former British Leyland car company chief Sir Michael Edwardes and the former motor racing superstar Stirling Moss.