Company primes business for sale but City sources doubt £1.1bn aim
Following Aviva’s strategy to focus on core assets and make disposals, it emerged this week that the company may sell its RAC subsidiary.
Aviva has recently completed a separation of the management and marketing departments, priming the business for a potential sale.
RAC was bought by Aviva for £1.1bn in 2005 in a deal brought about by former chief executive Patrick Snowball. Although current chief executive Andrew Moss was group finance director when the acquisition took place, sources said he did not share Snowball’s enthusiasm for the purchase.
If Moss decides to sell RAC, the big question will be over price. City sources believe Moss would sanction a sale if he could achieve close to the price Aviva paid for it.
Companies House shows that RAC plc, the holding company, which has inter-company loans and pension deficits, made a £6m after-tax profit in 2009 and a loss of £101m the year before. The subsidiary, RAC Motoring Services made a £51m after-tax profit in 2009 and £52m the year before.
In today’s pricing, Aviva would be lucky to achieve a sale price of £1.1bn on a company with pension deficit problems.
Aviva declined to comment on a possible sale, but Moss’ strategy is likely to be to make RAC a standalone business so that a sale can go ahead smoothly when market conditions are right. At Aviva’s year-end results earlier this month, Moss signalled Aviva would sell assets to concentrate on core markets.
News of a sale would not surprise staff at RAC. They have seen big changes over the last six months, which have included the creation of the post of managing director. Prior to this, a mixture of staff with dual RAC and Aviva responsibilities reported to the board.
Angela Seymour-Jackson became RAC managing director in December. She was previously distribution director of Aviva UK life.
Aviva has also created a new role of chief financial officer in recent months, which was taken up by Diane Cougill, former UK general insurance chief risk officer.
Another notable face to leave Aviva is David Tyers. He left his role as Aviva director of insurance marketing to become RAC sales and marketing director.
Brian Spinks, who was previously Aviva head of corporate marketing, has become the latest figure to move over to RAC, joining last month.