RAC to seek higher price at auction

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The Independent Online
THE ROYAL Automobile Club yesterday said it will hold an auction for corporate bidders in an effort to push the price it can fetch for its motoring services division up to pounds 400m.

The club said that the auction would run in parallel with its stated policy of seeking a flotation of the business, following the Government's decision last week to block a pounds 450m sale to Cendant, the United States services group.

At least six companies are considering joining the auction process, with Lex Services, GE Capital and CinVen named as front-runners.

Both Lex and GE Capital, which already have a presence in the motor services industry, could realise synergies from a takeover.

CinVen, the venture capital group, was one of the leading contenders to buy the motor services division when the RAC first put it up for sale. Other likely corporate bidders include PPM Ventures, Schroder Ventures and Direct Line.

While bidders privately claim that the business is worth no more than pounds 330m, a spokesman for the RAC yesterday said the flotation would probably go ahead unless a bid approaching pounds 400m was received.

The RAC is expected to release 1998 figures for its motoring arm in the next few weeks. If these show strong trading they could be used to enhance the price.

A pounds 400m bid would allow the RAC's 11,500 full members to enjoy windfalls of more than pounds 30,000 each, substantially more than they are likely to gain from a flotation.

However, thousands of RAC members are excluded from the windfalls because of their status as overseas or retired members.

Around 1,700 overseas members are continuing a legal action against the RAC's board.

The overseas members will claim in court in a fortnight's time that they have been unfairly frozen out of the pounds 400m sale of the motoring arm. Only the 11,500 "full" members will benefit.

The overseas group claim that representatives of the Club made "false and misleading" statements" to Mr Justice Neuberger in his first court hearing last July when he ruled that the Club's rules could be altered to allow a sale.

The overseas members are also awaiting a judgment due "any day now" over whether their case can be heard in the jurisdiction of California or not.