United International Transportation Co., popularly known as Budget Saudi Arabia, has received the green light from Saudi Arabia’s competition authority for its acquisition of Al-Jazira Equipment Co., also referred to as Auto World. The approval by the General Authority for Competition was disclosed through a communication on the Saudi Stock Exchange, signaling the full purchase of the operational lease and car maintenance entity by Budget Saudi Arabia.
Previously, on December 24, the vehicle leasing company had announced the signing of an agreement to entirely acquire Auto World. This would be achieved by increasing its capital through the issuance of new shares to Auto World’s selling shareholders.
In the month of August 2023, Budget Saudi Arabia had drafted a non-binding memorandum of understanding with the aim of acquiring all shares of Auto World. This would be done by issuing stocks to its parent company, the Saudi Economic and Development Co. (SEDCO).
An earlier disclosure on the Tadawul revealed plans to boost the firm’s capital from SR711.66 million to SR781.66 million, by issuing 7 million new shares. This move would expand the share count from 71.17 million to 78.17 million, reflecting a 9.84 percent capital increment.
The total value of the shares involved in the acquisition is set at SR455 million and represents a full 100 percent stake in Auto World, which consists of 300,000 units.
The acquisition process is to be executed via Aljozoor Alrasekha Transportation Co. Ltd, also known as Rahal, a fully-owned subsidiary of Budget Saudi Arabia.
The worth of the deal was determined based on the volume-weighted average price of shares over a six-month trading period from February 24 to August 24, 2023. Following this valuation, the fair market value of the vehicle rental service provider was determined to be SR4.62 billion, or SR0.65 per share.