Saga and the AA have agreed to join forces in a £6.2 billion deal, sparking fresh anger over the workings of the controversial private equity industry behind the merger.

Under the terms of the deal, Saga’s private equity owner, Charterhouse, and the AA’s owners, Permira and CVC Capital, shared a pot of at least £2 billion in dividends, but they declined to provide any specific details of how they would share the spoils.

Their move comes amid widespread criticism of the buyout industry and arises less than a week after Damon Buffini, the leading managing partner in Permira, told a Commons Treasury Select Committee inquiry into private equity that he “had nothing to hide”.

Andrew Goodsell, Saga’s chief executive and head of the combined group, said that he would receive about £144 million as part of the deal, although he plans to reinvest 25 per cent of that into the new group.

About 2,130 of Saga’s employees will share in a windfall of £280 million – or an average of £8,000 in cash and £2,500 worth of shares in the merged company – and with AA staff hold a 20 per cent stake.

The AA breakdown recovery and insurance group has come to symbolise the trade unions’ fight against private equity after CVC and Permira cut 3,000 jobs after their acquisition of the group for £1.7 billion in 2004 from Centrica, the British Gas owner.

Tim Parker, the AA’s chief executive, who stands to make an estimated £40 million from the deal, will stand down once the transaction is completed. He has been there less than three years.

Paul Maloney, national secretary of the GMB, said yesterday that the bonuses being paid to the private equity bosses “shows the extent to which we have entered into a casino economy”.

Mr Maloney said that the deal could lead to serious job cuts as the two companies integrated their call centres and back- office IT functions.

In a joint statement, Saga, the insurance and travel group for the overfifties, and the AA said they planned to merge their assets into a new holding company. The transaction values the AA at £3.35 billion and Saga at £2.8 billion.

The as yet unnamed group will be 37.5 per cent owned by Charterhouse, while Permira and CVC will retain a 42.5 per cent stake and management will hold 20 per cent.

The new holding company will be financed with £4.8 billion of new debt, which is £2 billion more than the existing debt of Saga and the AA. It is understood that the £2 billion excess will be shared among the private equity firms as a dividend.

Permira and CVC have already taken out their original £500 million of respective equity investments in the AA, so this deal effectively means they have tripled their money on their original investment.

Mr Goodsell said that the aim was to bring some of Saga’s best practices and skills to the AA, which he said had failed to engage with its 15 million roadside members properly.

In the past 18 months, the AA has lost lucrative fleet contracts with Volkswagen, Seat and Skoda to its rival the RAC.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive