Kwik-Fit owner in AA bid

The owner of one of AA Insurance's main broking rivals has emerged as one of the front runners to bu...

The owner of one of AA Insurance's main broking rivals has emerged as one of the front runners to buy the whole motoring organisation from Centrica.

CVC Capital Partners, the private equity group that already owns the tyre and exhaust specialist Kwik-Fit, is set to pay £1.5bn for the AA, according to market sources. Kwik-Fit has its own telebroking subsidiary - Kwik-Fit Insurance Services.

Geoff Miller, market analyst at Bridgewells Security, said: "The only possibility of the price moving on substantially from here is if there was to be an offer from a financial institution such as a bank or an insurer.

"However, they are only likely to do this if the firm fits their business strategically. At the moment, there is no sign of any of these companies stepping up." Centrica, which bought the AA for £1.1bn less than five years ago, is believed to be selling the association because it is no longer part of the group's core long-term strategy.

Despite both the AA and Kwik-Fit owning broking subsidiaries, Mr Miller said that any deal would not have too much of an impact on the market.

"Although the two companies are similar, they are only in direct competition in some areas so there is not likely to be too much restructuring.

"You have two businesses that have similarities and if you could ensure the AA was referring as much business as possible to Kwik-Fit, there would be some distinct benefits."

A spokesman from Centrica refused to comment on the bids that had been received, or to give a deadline for the final decision.

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