United International Transportation Company (Budget Saudi), a prominent car rental company in Saudi Arabia, has solidified its position in the regional logistics sector by acquiring a significant stake in a UAE-based freight forwarding firm. The deal sees Budget Saudi take a 70% ownership position in Overseas Development LLC, a move that expands the company's reach and service offerings across the Arabian Peninsula.
The acquisition, valued at AED 13.35 million (approximately USD 3.63 million), comes on the heels of a memorandum of understanding signed in March 2023. This broader agreement outlined Budget Saudi's intention to acquire a 70% stake in subsidiaries of Overseas Development Holding Company across Saudi Arabia, the UAE, and Kuwait. The finalization of the UAE portion of the deal marks a significant step towards realizing this plan.
Analysts suggest that the move by Budget Saudi is strategically motivated. The company seeks to capitalize on the burgeoning logistics industry within the GCC region, driven by factors such as e-commerce growth and increasing trade volumes. By acquiring Overseas Development, Budget Saudi gains access to established freight forwarding expertise and infrastructure, enabling it to offer a more comprehensive suite of logistics services to its clientele.
This acquisition is not Budget Saudi's first foray into the logistics sector. In February 2023, the company received approval from Saudi Arabia's competition watchdog to acquire Al-Jazira Equipment Co. This move signaled Budget Saudi's growing ambitions beyond car rentals and its intent to become a more diversified transportation and logistics player.
The combined expertise of Budget Saudi and Overseas Development is expected to create a formidable force within the GCC's logistics landscape. The integration of Budget Saudi's extensive network and resources with Overseas Development's freight forwarding capabilities could lead to enhanced service offerings, improved efficiency, and a stronger regional presence.
Industry experts are keenly watching the next steps in Budget Saudi's expansion plans. With a 70% stake secured in the UAE arm of Overseas Development, speculation is rife regarding the timelines for finalizing acquisitions in the remaining territories outlined in the initial memorandum of understanding. The potential consolidation of all three subsidiaries under the Budget Saudi umbrella could significantly alter the competitive dynamics of the GCC's logistics sector.