Aviva to sell RAC for £1bn to private equity group
Insurance group Aviva has agreed to sell the RAC to US private equity firm Carlyle Group for £1bn.
The move is part of Aviva's drive to focus on its main insurance and savings operations.
Aviva said it expected to make an accounting profit of £600m from the sale and that it would use the proceeds to strengthen its balance sheet and invest in its priority markets.
The RAC is the UK's second-biggest car breakdown service.
Based in Birmingham, it employs 4,000 staff and has more than seven million customers.
It made a pre-tax profit of £82m in 2010.
Aviva shares were up 1.2% in morning trading.
The sale is expected to be completed by the end of the third quarter of 2011.
Under the terms of the deal, Aviva will make a one-off contribution of £67m into the RAC pension scheme, which had a deficit of about £160m at the end of 2010.