Budget Saudi Strengthens Market Position with Acquisition of AutoWorld

Saudi Arabia's car rental and leasing giant, Budget Saudi, has secured a strategic move to solidify its position in the Kingdom's growing transportation sector. The company's shareholders recently approved a capital raise through issuing new shares to acquire competitor, Al Jazira Equipment Company, also known as AutoWorld. This acquisition significantly expands Budget Saudi's fleet and strengthens its presence in the car leasing market.

The deal involves issuing 7 million ordinary shares by Budget Saudi to SEDCO Holding, the parent company of AutoWorld. This translates to an 8. 96% stake in Budget Saudi for SEDCO Holding after the capital increase. The newly issued shares are expected to begin trading on the Saudi Stock Exchange (Tadawul) once all necessary procedures are finalized.

The acquisition brings substantial benefits for Budget Saudi. AutoWorld's fleet of approximately 14, 000 vehicles will be integrated with Budget Saudi's existing fleet of nearly 49, 300 vehicles (based on 2023 figures). This combined fleet size positions Budget Saudi as a dominant player in the car leasing market, allowing them to offer a wider variety of vehicles and cater to a broader customer base.

Furthermore, the acquisition is expected to generate significant cost savings for Budget Saudi. By merging operations and eliminating redundancies, the company anticipates achieving economies of scale, ultimately improving profitability in the medium to long term. The strategic move also allows Budget Saudi to tap into new market segments. AutoWorld specializes in long-term operational leasing and car maintenance, a sector complementary to Budget Saudi's existing short-term car rental services. This diversification strengthens Budget Saudi's ability to adapt to market fluctuations and cater to the evolving needs of customers.

Fawaz Danish, President & Group CEO of Budget Saudi, expressed his optimism regarding the acquisition's potential. He stated that the strategic move provides a "robust platform for future growth opportunities, " fueled by the strong Saudi Arabian economy, ongoing shifts in the transportation sector, and the flourishing tourism industry.

Budget Saudi also plans to leverage the acquisition to expand its customer reach. The company intends to integrate its "Payless" brand, specializing in budget-friendly car rentals, with AutoWorld's operations. This move aims to attract a wider range of customers seeking cost-effective car rental options, including residents, business travelers, and tourists. By combining its offerings with AutoWorld's, Budget Saudi hopes to achieve significant customer base diversification and propel further growth.

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