RAC plc: Aviva acquisition statement

Article date: 10 March 2005

Today Aviva has announced that it has agreed in principle toacquire RAC at a price of 925p per share representing a total valuefor RAC of ?1.25 billion (including ?140 million of acquired debt).The Board of RAC believes that this offer is in the best interestsof RAC?s shareholders and recommends that they accept the offer.The offer is subject to shareholder and regulatory approval.

Commenting on the news, Andy Harrison, Chief Executive of RACplc, said:
?This acquisition will help to accelerate our growth, particularlyin Financial Services which is one of our biggest strategicopportunities. The offer represents a significant premium to ourrecent share price reflecting the success of RAC and the strengthof our brands ? this is a testament to the commitment andcontribution of all our colleagues in RAC.?

Recent highlights:

  • In recent years, RAC has delivered strong organic growth byleveraging the strength of its brands and customer base. RAChas:
  • grown underlying profits by 12% per annum over the last 3years and continuing sales by 8% per annum over the sameperiod
  • generated strong cashflow with debt reduced to ?140 million byDecember 2004
  • achieved an increase in Total Shareholder Return of 63% over 3years and 189% over 5 years
  • grown dividend by 6% per annum in 2004 and 2005
  • achieved a share price rise of 44% from 516p to 742p over 3years, and 123% from 333p over 5 years
  • won major outsourcing contracts on the B2B side including BA,MoD and Ford
  • In October 2004, RAC made a major strategic step with the ?40million AXA transaction by which it gained full control over thebrand in financial services and significantly increased the scaleof the business. This opened up our biggest financial andstrategic opportunity.
  • In 2004, RAC was widely recognised for its excellence incustomer service, winning more awards than ever before
  • JD Power No. 1 in Roadside Service ? as voted by itscustomers
  • Won at the Fleet Excellence Awards: Service Supplier of theYear, and best in driver training (BSM), accident management (RACBusiness Solutions), vehicle leasing (LVL), fleet software (RACsoftware solutions), and vehicle recovery (Roadside)
  • One of the major factors behind this success has been theimprovement in colleague satisfaction which has risen to recordlevels
  • Since 1999, RAC has refocused on its growth businesses withthe sale of around 20 business for total proceeds of approximately?350 million
  • RAC was bought for a net consideration of approximately ?320million in July 1999 by Lex Service Plc which was later renamedRAC plc

RAC Consumer Services:
The RAC brand is one of the most trusted in the UK. We give peaceof mind to millions of customers through our 24-hour roadside andreplacement windscreen services, our range of motor, legal and homeinsurance products and advice on personal injury claims. In BSM, weare the market leader in driving tuition, providing training to157,000 pupils each year from beginners starting on our uniquesimulators to experienced drivers requiring advanced skills forbusiness or personal use. Consumer Services has grown steadily overrecent years and now contributes over half the Group?s operatingprofits.

RAC Business Services:
We have strong business to business credentials through our Lex andRAC?s brands and provide extensive vehicle and customer servicesincluding roadside assistance, motor claims handling, contactcentres, fleet management, vehicle finance, supply chain managementand vehicle distribution and sales. Our customers include theMinistry of Defence, British Airways, Norwich Union, Ford, andAudi. We provide support and service around the clock 365 days ayear.


For further information:

Neil Lovell
RAC plc Corporate Communications Director
07768 298636

Anita Scott/ Nigel Prideaux
Brunswick Group LLP
020 7404 5959

With 7 million members, RAC is one of the UK's most progressivemotoring organisations and the first choice provider for bothprivate and business motorists. Whether it's roadside assistance,windscreen repair and replacement, learning to drive, vehicleinspections, legal and financial services or up-to-the-minutetraffic and travel information - RAC is able to meet all motorists?needs.

RAC was ranked the top roadside rescue and recovery company inthe J.D. Power and Associates 2004 UK Roadside Assistance Study SM.Study based on responses from 23,641 owners and drivers of 51 and02 registered vehicles who required roadside assistance. www.jdpower.com

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