Budget Saudi's Acquisition of AutoWorld

ESG Logo

Message from our leadership

________________________________________________________________________________________________________

 Key Documents

Investor Presentation [download]

Factsheet [download]

Shareholders’ Circular [download]

________________________________________________________________________________________________________

 

FAQs

1. What are the key terms of this acquisition?

- Budget Saudi is acquiring 100% of AutoWorld by issuing 7 million new shares to its owner, SEDCO Holding, one of the leading Saudi family offices and institutional investors.

- The Company will execute this transaction through its wholly owned subsidiary Al Jozoor Al Rasekha Trucking Company (“Rahaal”).

2. What is the acquisition price?

- The acquisition price is the value of 7 million shares when executing the transaction.

3. How is Budget Saudi paying for this acquisition?

- This is a 100% share swap deal, and therefore there is no cash changing hands.

- Per the share purchase and share subscription agreement entered on 21/12/2023 with SEDCO Holding, Budget Saudi will acquire 100% of AutoWorld from SEDCO Holding, in exchange SEDCO Holding will receive 7 million ordinary shares by way of new ordinary share issuance.

4. At what share price is the share swap being executed?

- The share swap is being executed at SAR 65 per share.

- Budget Saudi’s share price was determined based on the 6-month volume weighted average price (VWAP) of Budget’s Saudi’s shares from 24/02/2023 until 24/08/2023.

5. Will Budget Saudi’s capital increase? If so by how much?

- Budget Saudi’s capital will be increased from SAR 711,666,680 to SAR 781,666,680 through the issuance of 7 million ordinary shares, thereby increasing the total number of Company shares to 78,166,668 ordinary shares, representing an increase of 9.84% of the Company’s share capital prior to the issuance of the new shares.

6. As a current shareholder of Budget Saudi Arabia will this acquisition dilute my shares? If so by how much?

- Like many share swap agreements, this agreement is considered to be dilutive for existing shareholders of the Company.

- The expected dilution impact is 8.95%.

- Having said that, this acquisition is considered to be value accretive, in other words the earnings per share post-acquisition is expected to increase. This means that while the profits are distributed amongst more shareholders, the earnings per share post integration and realization of synergies is expected to increase. Therefore, this deal is considered a win-win for all parties involved.

- [Since the announcement of the non-binding offer on 24/08/2023 through to the end of March, the value of Budget Saudi’s shares has increased by 36%, with share price sustaining well above SAR 65, indicating that the market believes this deal to be value accretive and will help unlock greater shareholder returns in the future.]

- [For illustrative purposes only, pre transaction and based on the transaction execution price of SAR 65 per share, existing shareholders’ value of their 100% ownership is SAR 4.6 billion. Based on the closing price of SAR 86.80 per share on 31/03/2024 post transaction and potentially after a c.9% dilution, existing shareholders’ value of their 91% ownership in Budget is expected to be SAR 6.2 billion, a 35% increase in value.]

7. What are the key benefits of the acquisition?

- The acquisition enhances our market leadership, expands our services and customer base within the corporate and public sector segments, where we believe there are ample untapped opportunities, and establishes a stronger, unified brand presence.

- It also allows us to capitalize on various tangible cost synergies for improved efficiency and profitability expansion.

8. How will this acquisition impact Budget Saudi's financials?

- The acquisition is expected to positively impact our revenue by expanding our operational capacity and customer base.

- Cost synergies, economies of scale and reduced redundancies leading to operational efficiencies post-acquisition are anticipated to improve our EBITDA and overall financial performance.

- We expect this acquisition to be EPS accretive.

9. What is the expected timeline for the completion of the integration should the acquisition go through?

- Our focus is on ensuring a smooth transition that maximizes the identified synergies while maintaining operational continuity.

- We anticipate all cost synergies to be realized within 3 years.

- We will provide updates on the progress of the integration process as we move forward.

10. Will there be any changes to the management structure at Group level or of either company post-acquisition?

- Our focus is on leveraging the strengths of both teams.

- We will provide updates on the progress of the integration process as we move forward.

11. How will this deal affect existing customers and suppliers?

- We anticipate a positive impact on our relationships with stakeholders.

- Customers and suppliers will benefit from our expanded services and strengthened market presence.

________________________________________________________________________________________________________