United International Transportation Company, or Budget Saudi, a comprehensive provider of mobility solutions in the Kingdom of Saudi Arabia, announced the acquisition of Al-Jazira Equipment Company, known as AutoWorld, a vehicle leasing company owned by SEDCO Holding.
Budget Saudi shareholders voted in favor of the acquisition at an Extraordinary General Meeting of Shareholders held on June 24. This landmark decision represents an important milestone in the history of Budget Saudi and paves the way for strategic expansion in a dynamic market poised for healthy growth.
Subject to shareholder approval at the EGM, the 7 million fully paid ordinary shares will be issued by Budget Saudi to SEDCO Holding and are expected to begin trading on the Saudi Exchange after completing the necessary procedures with the exchange and the Securities Depository Center Company. The new shares represent 8.96 percent of Budget Saudi’s share capital after the capital increase. Following the issuance of the new shares to SEDCO Holding, a Saudi Shariah institutional investor with extensive experience and a strong history of investing in domestic champions, it will directly and indirectly hold 8.96 percent of Budget Saudi shares. AutoWorld shares will be transferred from SEDCO Holding to Aljozoor Alrasekha, a wholly owned subsidiary of Budget Saudi.
Fawaz Danish, President and Group CEO of Budget Saudi, said: “The strategic acquisition of AutoWorld provides a solid platform for future growth opportunities, strengthened by the strong Saudi real economy, structural changes in the transportation sector and a thriving tourism industry. This agreement, the first of its kind in Budget Saudi’s history, allows us to lay the foundation for strategic initiatives that drive sustainable growth, enhance competitiveness and create shareholder value.”
With this acquisition, Budget Saudi will strengthen its position as the market leader in long-term vehicle rental and leasing in the Kingdom. According to a credible, independent market report, the acquisition will increase the company’s market share from approximately 12 percent to 18 percent. AutoWorld’s fleet of 14,000 vehicles brings Budget Saudi’s total car leasing fleet to 49,300 (based on 2023 data), a strategic move aimed at consolidating the Saudi car leasing market and improving the quality of services in the growing transport sector.
Additionally, this acquisition strengthens Budget Saudi’s market share in the business-to-business and business-to-government segments, where its management anticipates significant growth potential driven by the market shift from asset ownership to usage models. In addition, it increases its ability to set competitive prices, improving overall profitability in the medium and long term.
The acquisition aims to expand Budget Saudi’s customer base, providing access to new customers in key industry verticals such as oil and gas, among others, where AutoWorld has a strong presence. By acquiring a competitor with complementary fleet and service offerings, Budget Saudi can diversify its portfolio to meet a broader range of customer needs and preferences. This diversification helps mitigate the risks associated with market fluctuations and changing consumer preferences.
Following the acquisition, Budget Saudi plans to merge its short-term car rental brand Payless with AutoWorld to reach more price-conscious customers, including locals, business travelers and tourists, to further diversify and expand its customer portfolio.
The acquisition will unlock significant cost synergies, reduce redundancies and achieve economies of scale, leading to improved profitability in the medium to long term. These efficiencies include improved fleet utilization, optimized procurement, increased negotiating power with key suppliers, insurers and other vendors, and consolidated administrative functions.
The combined entity will benefit from optimized operations and shared resources, reducing unnecessary costs and increasing overall flexibility and responsiveness to market needs. Based on estimates from independent experts, the company anticipates achieving significant, recurring cost synergies annually, starting in the third year after integration.
AutoWorld is a profitable company with a healthy profitability margin in line with industry averages. This acquisition is expected to be accretive to post-integration EPS. The company’s management anticipates realizing debt cost savings through improved terms for AutoWorld’s existing debt. Following integration and the realization of cost synergies, Budget Saudi expects AutoWorld’s net income to increase further, increasing future consolidated net profits and margins.
The integration of two well-known and reputable brands will lead to a stronger and more unified presence in the market. By harmonizing the best practices and value propositions of both companies, Budget Saudi aims to increase customer satisfaction and loyalty, contributing to long-term revenue growth.
Budget Saudi has seen significant growth in revenue and fleet. As part of its growth strategy – and in line with Vision 2030 – the company has launched a number of sustainable, eco-friendly initiatives to reduce the carbon footprint of its fleet.