Former Tesco chief executive, Sir Terry Leahy, who ran the supermarket giant for 14 years, has been recruited to help private equity buy RAC from Aviva.
Private equity firm Clayton Dublier and Rice has recruited Leahy as an adviser, and have thrown him straight into action by asking him to help see off rivals wanting to buy RAC.
It seems likely that as well as meeting Aviva’s advisers JP Morgan, Sir Terry will also meet the Aviva management at some stage to help give their bid gravitas.
One source close to the deal said private equity was willing to go as high as £800m, although that was later disputed privately by analysts who believe a deal of between £500m and £600m is a realistic price.
The insurance arm is at break even point and the breakdown recovery business churns out profits of more than £50m on a consistent basis.
The source said private equity view the breakdown profits effectively as a guaranteed 'annuity' which can pay off the huge interest payments of the leveraged buyout.
“There are only three categories [of private equity adviser]: full-time, window-dressing and putting in enough hours to make a meaningful contribution. This is in the last category,” Sir Terry said in an interview on Tuesday.
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