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Last Updated: Tuesday, 8 March, 2005, 16:37 GMT
RAC shares soar on takeover talk
RAC roadside recovery van
The RAC has seen flat demand for its roadside rescue service
UK motoring group the RAC says it has received an approach that could lead to a takeover offer.

Shares in the Buckinghamshire-based motoring services firm rose by nearly 19% on the news, giving it a market value of about 1bn.

It said following recent share price movement, "the board of RAC confirms it has received an approach which may or may not lead to an offer".

The move comes less than a year after the AA was bought for 1.75bn.


The new financial year has started well and I remain confident in our future prospects
Andy Harrison, RAC chief executive

The 108-year-old body was founded as the Automobile Club of Great Britain.

In 1999 the by-then Royal Automobile Club was bought for 437m by Lex.

The RAC's 12,000 full members each received 34,000.

At the time Lex said its combination with RAC would create a "cradle-to-grave" motoring service for private and business customers offering car purchase and finance, insurance and warranty, and accident repair and recovery.

Progress stalled

On 16 February, RAC announced a renewed push into car insurance, as it posted a 2% rise in 2004 profit.

It said at the time that membership of its roadside recovery scheme was flat and sales at its windscreen replacement arm were down 2%.

It added that it planned to spend 5m this year on marketing financial services such as car insurance and legal cover to its members.

The RAC's wide portfolio of businesses includes the BSM driving school.

It has about 275,000 motor and home policyholders under the RAC Insure brand, and its business services arm includes Lex vehicle leasing - a joint venture with HBOS offering contract hire, fleet management and car finance services.

The firm is also the largest vehicle services provider to the Ministry of Defence, managing more than 14,000 vehicles.

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