Fill it up

1 July 2004 By Robert Cyran Follow @rob_cyran

Investors should be pleased. Not only has Centrica ended a diversification strategy that hasn’t worked; the result is a chunky £1.5bn payout

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Centrica has agreed to sell its Automobile Association unit for £1.75bn to CVC Capital and Permira. The AA has several businesses: roadside repair, car insurance and travel publishing. The deal is expected to close by the end of September at the latest.

The UK gas firm will net £1.6bn after fees. It plans to pay out £1.5bn to shareholders via a £1bn special dividend, equal to 23p per share, and £500m in share buybacks.

Also, the group announced that is was raising its payout ratio from its current 32% to 50% by 2005. It also plans to increase investments in gas and electricity production by an additional £2bn£3bn over the next five years.

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