10 join £1bn Saga race

The potential sale of UK financial services-to-holidays group Saga has attracted at least 10 bids of more than £1bn (€1.5bn), it was reported today.

Private equity groups are leading the race to land the business aimed at the over-50s, although Saga has not yet decided if it will pursue a sale or a flotation.

The Financial Times said the first bid deadline in the auction process passed yesterday with buy-out heavyweights from the United States, Blackstone and Kohlberg Kravis Roberts, among those thought to be interested.

Offers between £1bn and £1.2bn (€1.5bn to €1.8bn) are believed to have been tabled in what is forecast to be one of the year’s most hotly contested auctions.

Saga is running a dual-track process of a sale and float and is unlikely to decide which route to pursue until the last minute.

However, one investment banker told the FT that a stock market listing was “highly unlikely”, partly due to the tough market conditions.

Either way, the move will provide a windfall for the family of founder Sidney De Haan, who set up the Folkestone-based business from a hotel in 1951. It now employs about 2,500 people in the town and earlier this year announced annual turnover of £382.7m (€567m) and profits of £81.6m (€120.9m).

Saga is a dominant force in its market, with services ranging from insurance and holidays to home shopping. As well as a leading magazine, it has a database of eight million current and potential customers and near-universal brand awareness among its target market.

One area of interest will be whether the buy-out groups consider sub-contracting Saga’s insurance underwriting operation, possibly to one of the big industry players such as Royal & Sun Alliance or Norwich Union owner Aviva.

It is thought the auction process will move to its second round stage next month. A spokeswoman for Saga declined to comment today.