Budget Saudi signs SSA to fully acquire AutoWorld by issuing new shares

Logo of United International Transportation Co. (Budget Saudi)

United International Transportation Co. (Budget Saudi) signed a share subscription agreement (SSA) on Dec. 21 with Saudi Economic and Development Holding Co. (SEDCO) to fully acquire the latter’s entire stake in Al-Jazira Equipment Co. Ltd. (AutoWorld), amounting to 300,000 shares.

The deal will be concluded through Budget Saudi’s wholly-owned subsidiary, Al Jozoor Al Rasekha Trucking Co. (Rahaal), by issuing new shares to the owner of AutoWorld’s capital in Budget Saudi, according to a statement to Tadawul.

Under the deal, Budget Saudi’s capital will be increased from SAR 711.67 million to SAR 781.67 million through by issuing 7 million ordinary shares.

Accordingly, the total number of Budget Saudi shares will increase from 71.17 million to 78.17 million, representing an increase of about 9.84% of Budget Saudi’s share pre-acquisition capital.

AutoWorld's shares are valued at SAR 455 million based on the number of target shares, corresponding to 300,000 ordinary shares, or 100% of the capital of AutoWorld, the statement added.

Budget Saudi valuation for the purpose of the acquisition deal was calculated using the rounded-up volume weighted average price (VWAP) for a six-month period from Feb. 24, 2023, until Aug. 24, 2023. This brings Budget Saudi’s fair market value to SAR 4.625 billion, or SAR 65 per share.

The share swap ratio is 23.33 new shares in Budget Saudi for every one share held by SEDCO in AutoWorld, based on the number of shares desired to be acquired in AutoWorld, which amounts to 300,000 ordinary shares, and the number of new shares that will be issued in Budget Saudi to the selling shareholder of AutoWorld for the deal.

After the acquisition, the ownership of Budget Saudi's current shareholders will decrease from 100% to 91.04%, reducing their ability to influence decisions by 8.96%.

The ownership percentage of shareholders to whom new shares will be issued after the acquisition is 8.96%, the Saudi-listed firm said in the statement.

The agreement also requires AutoWorld's owner to obtain change of control approvals in accordance with 10 contracts, a condition that Budget Saudi can waive in writing.

The agreement will be terminated if its terms are not met within 180 days of signing or such other date as the parties may agree in writing.

Furthermore, either party may terminate the agreement upon written notice to the other party if any applicable law is enacted that makes the consummation or completion of the deal illegal, as well as any judgment, injunction, order, or decree of any government authority having competent jurisdiction prohibiting Budget and SEDCO from consummating the completion of the deal.

The agreement can also be terminated if any of the conditions under the agreement have not been fulfilled or waived by the long stop date, or if either party materially breaches the obligations imposed on them under the agreement during the period from the signing of the agreement until the completion of the transaction.

The acquisition deal is subject to a number of conditions, including obtaining a no objection certificate for the acquisition deal from the General Authority for Competition, Tadawul's approval to list the new shares resulting from the capital increase, and Capital Market Authority (CMA) approval on the acquisition deal and the shareholders circular.

Moreover, it requires obtaining the approval of the extraordinary general assembly (EGM) of Budget Saudi in accordance with the provisions of the Companies Law, the Rules on the Offering of Securities and Continuing Obligations, and any other necessary or appropriate approvals in relation to the deal.

No related parties are participating in the deal, the statement included.