ComfortDelGro Goes All-In on CityCab

In a bold move to solidify its position in Singapore's taxi market, transport giant ComfortDelGro (CDG) has acquired the remaining shares of CityCab from ST Engineering for a staggering S$116.3 million. This landmark deal was announced on September 1.

A Long-Standing Partnership Ending

CityCab, which has been a joint venture for nearly two decades—CDG previously held a 53.5% stake, while ST Engineering accounted for 46.5%—will now operate solely under CDG's management. Since 2005, CityCab has integrated seamlessly into CDG's local taxi operations.

Strengthening the Point-to-Point Business

In its latest bourse filing, CDG highlighted that this acquisition will significantly enhance its core point-to-point transportation services and foster better integration in the global market, thereby adapting to evolving demands and increasing profit margins. The company anticipates that this move will be profitable right away.

Valuation Breakdown and Financial Implications

A comprehensive report commissioned by both parties arrived at a valuation of S$98.9 million for CityCab shares as of June 1. The final purchase price reflects a strategic decision proven by the funding through CDG’s bank facilities.

No Major Shake-Ups Expected

Interestingly, CDG indicated that this acquisition would not significantly affect its net tangible assets or earnings per share for the fiscal year ending December 31, 2025. The tangible asset value linked to ST Engineering's shares in CityCab is about S$37.4 million, according to the operator's recent audited financial statements.

ST Engineering Benefits from the Sale

For ST Engineering, this divestiture means an instant cash influx of S$116.3 million, translating to an impressive enterprise value-to-EBITDA ratio of 5.5 times, derived from CityCab's performance over the past year. The company also looks forward to recording a one-off gain of about S$77.2 million in their current financial year.

A Historical Legacy

CityCab, which commenced in 1995 from a merger involving Singapore Bus Service and ST Automotive—now part of ST Engineering—has a rich history in Singapore’s public transport sector.

Stock Market Reactions

Following the announcement, shares of ComfortDelGro rose to S$1.47, gaining 1.4%, while ST Engineering’s shares dipped slightly to S$7.61.

This strategic acquisition marks a significant stepping stone for CDG as it significantly expands its footprint in Singapore's competitive taxi industry.