Centrica is understood to have received a number of bids for the AA, the motoring organisation, by yesterday's deadline for interested parties to put offers on the table.
The auction of the AA, which Centrica is selling to concentrate on its core gas and electricity business, is thought to have turned into a two-horse race between the private equity firm Kohlberg Kravis Roberts & Coand a consortium of two UK houses, CVC Capital Partners and Permira. Centrica is demanding in the region of £1.5bn for the AA, Britain's biggest motoring organisation.
Centrica, the UK's largest supplier of gas and electricity, is considering using proceeds from the sale to return cash to shareholders, as well as to pay for more acquisitions in its core market. The company paid £1.1bn in 1999 for the AA, whose balance sheet included £306m of cash. It has since decided to reverse the strategy of building up a portfolio of strong retail brands and last year sold its 70 per cent stake in Goldfish, the credit card business, to Lloyds TSB.
The private equity firms have underlined the seriousness of their interest to Centrica by highlighting the fact that they already own businesses in the AA's sector. CVC owns Kwik-Fit, the car tyre-fitting, parts and insurance firm, while KKR has experience in the financial services sector.Reuse content