Aramex expands in Saudi Arabia with Saudi Tal acquisition

Aramex, the largest courier and logistics company in the Middle East, has acquired Saudi Tal for Commerce and Contract Company as it expands its operations in the region’s biggest economy.

The acquisition of Saudi Tal, based in Riyadh, for $80 million (Dh293.6m) opens more avenues of growth in the kingdom, which is the biggest market for Aramex in the Middle East, the company said yesterday to the Dubai Financial Market, where its shares are traded.

“Our acquisition of Saudi Tal supports Saudi Arabia’s Vision 2030, which aims to encourage private sector investment to diversify the economy,” said Bashar Obeid, chief executive of Aramex.

“This acquisition is also in line with our strategy to have leaner and more efficient operations in all markets we operate, and will allow us to focus on upgrading last-mile delivery through innovative solutions, which will ultimately result in an enhanced customer experience.”

Established in 1982 as an express courier service, Aramex has grown its operations to 65 countries.

The company, the first from the Arab world to list on Nasdaq before delisting to go private and later listing on the Dubai Financial Market, is seeking growth opportunities as it realigns its portfolio subsidiaries. In December, Aramex said it will sell its stake in a joint venture with Australia Post for $20m as both companies pursue opportunities in e-commerce independently. Aramex considers e-commerce, which increased the company’s overall revenue by 19 per cent in 2017, as a strategic imperative.

Aramex will transfer its 60 per cent investment in the e-commerce JV Aramex Global Solutions to Australia Post, incurring a $13m one-time write-off that will reflect in its fourth-quarter financial results after the sale is completed.

“The divestment will not affect our e-commerce growth strategy,” Mr Obeid said. Aramex reported a 38 per cent increase in third-quarter net profit citing growth in its e-commerce business. Net income in the three months to September 30 rose to Dh113m.

The company’s international express business grew due to expansion in cross-border e-commerce across the regions where Aramex operates, particularly in Asia and Turkey.

The takeover opens more avenues of growth in the kingdom, which is the biggest market for Aramex in the region