Singapore-based ComfortDelGro (SG:C52) has agreed to buy 100% of Australian taxi operator A2B Australia Ltd. (AU:A2B) for A$182 million in cash. ComfortDelGro already owns 9.25% of A2B and is willing to pay A$1.45 per share to own the rest of the company. Following the news, A2B shares gained 19.9% to close at A$2.14, while C52 shares rose 2.2%.
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SGX-listed ComfortDelGro is a multi-national land transport company operating a fleet of roughly 34,000 buses, taxis, and rental vehicles. Its operations span across Singapore, Australia, the U.K., New Zealand, China, Ireland, and Malaysia. C52 shares have gained 17.1% so far this year.
Meanwhile, ASX-listed A2B Australia is a leading supplier of personal transportation services and solutions and runs a fleet of 8,000 vehicles nationwide. Further, A2B provides technology and payment solutions for the transportation industry. Its renowned taxi brands include 13cabs Silver Service, and Cabcharge. Year-to-date, A2B shares have gained 109.4%.
Here’s Why ComfortDelGro is Buying A2B
Having an established presence in Australia, acquiring A2B will help ComfortDelGro expand its footprint in the continent. The deal will bolster ComfortDelGro’s Australian offerings while transforming it “into a national multi-modal mobility player.” The operations of both companies are highly complementary and follow a similar approach to expanding through customer acquisition and driver supply.
ComfortDelGro will undertake the acquisition through its wholly-owned subsidiary, ComfortDelGro Corporation Australia Pty Ltd. The deal is subject to A2B shareholder approval, Australian court approval, and regulatory clearance. The acquisition is slated to close in the first half of 2024, with the shareholder vote scheduled in March.
Is ComfortDelGro a Good Buy?
With six unanimous Buy ratings, C52 stock has a Strong Buy consensus rating on TipRanks. These ratings were given before the acquisition news and are subject to change. The ComfortDelGro share price forecast of S$1.60 implies 17.4% upside potential from current levels.
