MORE than 2,000 employees at the Folkestone based holiday and insurance giant Saga are in for a £10,500 windfall.

The payout will follow a merger between Saga and the motoring organisation firm the AA which was announced this week, which will be a £6.5 billion deal, with Saga valued at £2.8 billion and the AA at £3.35.

A spokesman for Saga said around 80 per cent of employees were in line for the money. They chose to invest in the company in 2004 following a management buyout, with many investing just £20.

There was speculation in the national press this week that Saga’s chief executive Andrew Goodsell will make £144 million from his eight per cent equity stake in Saga, although the spokesman would not confirm the figure.

The payouts are subject to the merger winning regulatory approval.

The merger will create the second biggest private equity owned company in Britain.

The two companies are to continue operating in their different fields, but under one umbrella. Saga’s headquarters will stay in Folkestone and the AA’s will remain in Basingstoke.

The new company will have more than 11,000 employees.

Saga chief executive Andrew Goodsell will head up the new company, while the AA’s chief executive officer Tim Parker, has signalled his intention to pursue new business projects outside the AA, once the deal is complete.

Mr Goodsell said: "These are two great brands, in different and complementary business areas, but they have many features in common.

"Both organisations can grow and benefit from sharing expertise and systems. We also see great opportunities to offer Saga’s products to the AA’s 50 plus members and the AA’s products to Saga customers. This is a great deal for both brands."

Approximately 3,900 people work for Saga and about 7,200 for the AA.

Saga’s business includes insurance, financial services, holidays, cruises, magazine publishing and other products all targeted at people aged 50 and over.

The AA is the UK’s leading motoring organisation with around 15 million members; its businesses also include insurance broking, publishing and a driving school.