Saga, the London-listed financial services and travel provider for over-50s consumers, is in detailed talks with one of Europe’s biggest insurers about a deal that will allow it to repay a chunk of its huge debt pile.
Sky News has learnt that Saga is in exclusive negotiations with Ageas, a Belgian insurer which tried to buy Direct Line Group earlier this year, about a long-term partnership arrangement for its insurance division.
City sources said on Tuesday evening that Saga and Ageas were confident of concluding a deal in the near future, although they cautioned that a final agreement had yet to be reached.
Under the deal, Ageas – which abandoned a takeover of Direct Line in March – would make an up-front payment to Saga, with a series of subsequent commission payments, in return for taking over the running of parts of the British company’s insurance operations.
The size of those payments was unclear on Tuesday.
For Saga, the transaction with Ageas would enable it to pay down debt and shift to a new operating model aimed at relieving some of the pressure on its balance sheet.
Saga was due to announce its half-year results on Wednesday, but on Tuesday afternoon said these would be delayed.
“Saga plc continues to explore partnership opportunities to support the group’s capital-light growth ambitions, crystallise value and enhance long-term returns for shareholders,” it said.
“While this process remains ongoing, the group today announces that it is delaying its half year results, which were due to be published on 2 October 2024.
“The results will be announced at the earliest possible opportunity.
“Saga confirms that performance for the first half is in line with expectations and the group remains on track for the full year.”
The talks with Ageas are not the first time that Saga has explored a transaction involving its insurance business.
In February last year, it held talks with Open, an Australian company, about a sale of the division but the talks fell apart.
Saga, which has been labouring under the weight of a large debt pile for years, is also in discussions about a similar partnership model for its cruises division, although these are understood not to be quite so advanced.
Last year it tapped its chairman, Roger de Haan, for a £35m loan, adding to the substantial sum of money it owes him.
The company’s shares have fallen by nearly 10% during the last 12 months, leaving it with a market capitalisation of just over £155m.
Mr de Haan, the company’s former chief executive, was parachuted back in to lead a turnaround in the summer of 2020, investing £100m as part of a broader capital-raising.
That came after it spurned a takeover bid for the whole company from private equity investors.
At the start of last year, it unveiled a global website called Saga Exceptional, aimed at providing advice and services to over-50s consumers.
Shares in Saga closed on Tuesday at 112.6p.
Ageas and Saga declined to comment.