Tuesday, June 26, 2007

Chance wasted to shed clear light on this AA-Saga deal

A lot of people are scratching their head about this merger/acquisition and asking the question: ‘Why’.

The Lombard article in today’s FT sums up my take on the market’s sentiment. This is an edited version (sorry subscription only).
The creation of a new company that will make money from holidaying over-50s as they reminisce about how uniformed AA patrolmen used to salute passing drivers is probably a good thing.
If any private equity deal justified a clear explanation of its benefits, it was this one. As investors in the AA, Permira and CVC have had enough stick from unions and the popular media to know better.
They and Charterhouse Capital Partners, Saga's main investor, should have presented the terms of the deal in public markets style - headlines, objectives, potential synergies, financial structure - and in sufficient detail to avoid arid and damaging speculation.
I am even more convinced that this deal has nothing whatsoever to do with business synergy and all to do with clever accounting. Dick Stroud

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