AA Another month, another extension

All,

Our analysis on the AA remains unchanged here.

Given the evident stability of the business, even if the bid fails we would expect limited downside into the mid 80s. Also, the concentrated shareholder base may yet decide to equity support. However, we remain confident that a bid will eventually materialise for equity of AA, and maintain our 5% of NAV position at 91%

Announced this morning was a further extension of the Takeover Panel to 5pm on 24th November.  The extension is not a surprise and the statement refers to “Commercial discussions” as well as further due diligence.  We are a little dismissive of further due diligence as AA is not a complicated business.  Commercial discussions (Price?) are likely to be taking place with some of the shareholders given the concentrated nature of the shareholder base.  The Top 3 shareholders account for 45% of the shares but it should be noted that Albert Bridge the largest at c.20% are not restricted and purchased further shares on the 23rd.   The next two largest shareholders, Davidson Kempner (15%) and Cleveland Square (10%) have not traded in the market since early August.  

Happy to discuss.  

Tomás

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E: tmannion@sarria.co.uk
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