Expert comment on AA takeover: Easy to envisage further cost cutting and sale of insurance business to ease debt

Commenting on the sale of the AA to private equity groups Warburg Pincus and Towerbrook, Professor John Colley, Associate Dean of Warwick Business School, said:

"The AA group has been around the financing merry go round before with private equity owners and public listings. It was available at a knock down price due to the extent of debt which it had gathered over the years, much of it at the hands of private equity.

"It is a strong brand with good market positions but in very competitive markets, so it is easy to envisage more cost cutting. That does not augur well for the workforce. Private equity usually have a plan and one wonders whether they will sell off the insurance business to realise cash. It is likely they will also issue more shares, as well as restructuring the group's existing debt."