pounds 1.5bn windfall plan for AA

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The Independent Online
MEMBERS OF the Automobile Association, Britain's largest motoring organisation, could be in line for windfall payments of more than pounds 300 because the group is considering strategic options that could end its mutually-owned status.

The AA could be sold to another motoring group in a pounds 1.5bn deal. As the AA is a mutually-owned, non-profit organisation, the proceeds would be distributed to the 4.3 million full members. But the 1.7 million associate members, such as the spouses of members and children under 21 who are named on the membership forms, would not qualify for a payout.

Ford, the US motor giant that paid pounds 1bn for Kwik Fit earlier this month, might be interested in acquiring the AA. But it is thought the AA is a long way from any deal and is merely exploring its options as competition in the roadside breakdown market hots up.

A spokesman said: "The AA has always kept in mind its prime purpose - to serve the best interest of our members. No decisions have been made.

"It is understandable, following dramatic changes in the breakdown assistance market in the last year, that speculation should arise. But the AA will not comment on speculation." The move follows the RAC decision to sell its motoring services division for pounds 450m This to Cendant, a US group which owns Green Flag. was blocked by the competition authorities last year.

The RAC now has a shortlist of other buyers which could trigger a pounds 33,000 windfall for the members of its Pall Mall Club, though the ordinary roadside members will miss out.

Any deal to de-mutualise the AA would have to be agreed by a two-thirds majority of its voting members. But the relatively small windfall sum may hamper securing that majority.

The group, which has has 48 per cent of the UK breakdown market, was founded in 1905 as a lobbying organisation to battle inaccurate speed traps set by police. It started roadside assistance before the 1914.

The AA employs 12,500 staff including 3,600 patrolmen and recorded a surplus of pounds 21m on sales of pounds 548m last year. All the proceeds were invested back.

The AA owns a huge road map publishing business, and interests in car insurance, and a driving school. But as competition increased from rivals Europ Assistance, Mondial and Direct Line, it has struggled to offer competitive rates.