Best city communications 2015
The flotation of car rescue group AA was complex. Owned jointly by three private equity companies, the AA had been merged with Saga since 2007. But following a lacklustre listing performance by its sister company, the decision was taken to accelerate the initial public offering for the AA in a deal that involved cornerstone investors and a management buy-in.
The complexity of the transaction meant that it was vital that details did not leak in the media ahead of the announcement. In June 2014, the AA’s private equity owners announced that they had sold a 69 per cent stake in the business to a group of institutional shareholders for 250p per share in a deal that valued the business at £1.6 billion.
The owners also sold shares to a management team led by industry veteran Bob Mackenzie, who would become chairman of the AA, and off ered the remaining shares to the public in an accelerated IPO two weeks later.
The deal’s unusual structure meant that agency Headland had only a short period in which to overcome initial scepticism and explain the AA’s strategy and plans in order to ensure a successful flotation. Initially the shares fell.
Within two months of its float, the AA announced that its chief executive Chris Jansen and finance director Andy Boland were to depart, leaving Mackenzie as executive chairman. The news prompted questions about the company’s corporate governance, but Headland focused on the long-term strategy of the business and the fact that Mackenzie had the support of the cornerstone investors. Shares rose.
Having transformed from a privately owned business to a listed company in a short period, the AA had not the requisite investor relations infrastructure in place. Headland built the in-house capability from scratch, identifying and recruiting a head of IR while establishing contact with analysts in the sector. The agency also led the planning and reporting of the first set of results.
Eight months after the flotation, the AA cut 300 jobs as part of a wide ranging review into expenditure. Headland managed the journalist briefings, putting the cuts into context to ensure coverage was balanced and focused on the potential for business growth.
One month later, the AA unveiled a major £1 billion restructuring to reduce its debt pile.
The news, which was completely unexpected, coincided with full year results that revealed
a drop in profits. Headland worked to ensure that the journalists and analysts focused on the transformational refinancing. The news received almost 100 pieces of positive or neutral coverage and just five negative pieces.
The shares rose to 434p at this time, up almost 60 per cent since flotation, making the AA the largest and one of the most successful initial public offerings last year.
‘This was a tricky IPO with lots of issues management, but the results were impressive,’ said the judges. ‘It was a very professional strategy.’
This article first appeared in issue 101