The RAC has had Dresdner Kleinwort Benson and Slaughter & May examining the possibilities for a float for around 12 months now, but it has taken the precipitous action of Jeffrey Rose, the now deposed chairman, in appealing to members over the head of the board, to bring matters to a head. According to Mr Rose, he got fed up with waiting for the board to make up its mind. Without telling fellow directors, he therefore wrote to members inviting them to requisition a meeting and get everything moving.
This they appear only too glad to do, so the board really had no option but to cave in, as it did yesterday, and promise a full consultation on demutualisation. The way in which this all this came about bears revisiting. The RAC began life as a cosy Pall Mall social and sports club for the early enthusiasts of the automobile. In time it developed the motoring services arm which most of us now recognise as the RAC.
Perhaps oddly, given that it is owned by a club in Pall Mall, this has evolved into a highly successful commercial enterprise with nearly 6 million customers, or associate members. It has fewer members than its arch rival, the AA, but it is generally considered to have been very much more innovative and switched on in recent years. The RAC's constitution is sufficiently complex for there to be room for doubt, but on the face of it these associate members have no voting or ownership rights. These lie entirely with members of the Pall Mall club.
None the less, it is reasonable to have some sympathy for the dithering way in which the board and the company have dealt with the matter thus far. Associate members are going to be mighty pissed off with the idea of further enriching a lot of fusty old masons propping up the bar in Pall Mall if there's nothing in it for them. In establishing a flotation mechanism, then, the board has to ensure there's something for the customer too, or they might just desert to the competition.
In other words, the issues are not quite as clear cut as Mr Rose would like us to believe. How the board is going to resolve these conflicts is anyone's guess. One for Andrew Regan of Co-op fame, perhaps. In this case, free car parking could presumably be arranged for the handing over of confidential documents. But then again, perhaps not.