Sale riddle as bidders target Saga

THE eagerly-anticipated £1bn sale or flotation of pensioners' holiday and personal finance group Saga will not go ahead until the second half of this year, bidders have been told.

The timing, regarded as a delay by venture capitalists circling the business, will allow a complex share sale agreement between two members of the owning family to unwind.

Meanwhile, private equity firms Apax and Cinven have joined forces in a bidding consortium.

Despite the length of the timetable, the complexities of Saga's diverse businesses means private equity bidders are already in fairly detailed talks with banks and each other to assemble possible deals.

The Apax/Cinven team will become bidding rivals to the existing private equity consortium of Candover, Hg Capital and JP Morgan Partners.

UBS, which is auctioning the business, denies the process has hit a delay, but management sources inside Saga said Roger De Haan, chairman and owner, now felt the pace of the sale was less urgent than when news of his plans leaked last November.

It is understood that De Haan's view on the need for speed has relaxed as the prospect diminishes of an increase in capital gains tax for owners of private-companies in the forthcoming Budget.

In addition, a clause in De Haan's purchase of his younger brother's 20% of the group 18 months ago grants Peter an extra payment if Roger sells it before July.

A Saga spokeswoman stressed there was no dispute among family members about sharing the deal proceeds. She added that the timing meant the bank could use Saga's financial results for 2003 as a marketing tool. These will be released in April.

Also, there will be time to show the benefits of Saga's recent decision to bring in-house its motor insurance underwriting operation, now based in Gibraltar.

Possible bidders received a teaser document with brief details before Christmas. One, who claimed he had been led to expect the sale to proceed this month, asked: 'Why would they crank up demand by putting out the teaser, then tell us the process won't go ahead until after the summer?'

While Apax and Cinven have often been rival bidders for some of Europe's biggest takeover deals, they have also worked together on transactions including the e1.2bn takeover of Vivendi's Aprovia healthcare and business publishing division.

Saga's status as a brand spreading from leisure to publishing and financial services has ruled out most potential trade buyers, making private equity firms likely winners in an auction that has generated huge interest.

However, bidders have sounded out a number of motor and household insurance companies in the hope of finding a partner to squeeze synergies out of those operations.

Royal & SunAlliance and Aviva are thought to be interested, as well as Royal Bank of Scotland, owner of Direct Line and Churchill.

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