ComfortDelGro buys rest of CityCab shares for S$116.3 million from ST Engineering unit

[SINGAPORE] Transport giant ComfortDelGro (CDG) acquired on Monday (Sep 1) all of ST Engineering Land Systems’ shares in taxi operator CityCab for a total purchase consideration of S$116.3 million.

CityCab was a joint venture between CDG, which owned 53.5 per cent, and the ST Engineering unit, which held the remaining 46.5 per cent stake.

CityCab has been managed by CDG since 2005 as part of the latter’s local taxi business. It is now a wholly owned subsidiary of the mainboard-listed company, while ST Engineering Land Systems no longer has any interest in it.

In a bourse filing, CDG said: “Full ownership will strengthen the group’s core point-to-point business in Singapore and allow the group to better integrate and shape its global point-to-point business, adapting to market demands and boosting profit contribution.”

It expects the acquisition to be earnings accretive.

Based on a jointly commissioned Aug 25 report by Deloitte & Touche Financial Advisory Services, both parties agreed on a valuation of S$98.9 million for the sale shares as at Jun 1, before arriving at the final S$116.3 million figure – which has been paid in full and was funded through CDG’s bank facilities.

CDG noted that the net tangible asset and book value attributable to ST Engineering Land Systems’ shares in CityCab is around S$37.4 million, based on the taxi operator’s audited financial statements for its financial year ended Dec 31, 2024.

It added that the acquisition is not expected to have any material impact on its net tangible assets or earnings per share for its financial year ending Dec 31, 2025.

For ST Engineering, the divestment will result in cash proceeds of S$116.3 million and translates to an enterprise value or earnings before interest, tax, depreciation and amortisation (Ebitda) multiple of 5.5 times based on CityCab’s unaudited Ebitda in the last 12 months for the period ended May 31, it said.

The net tangible asset value and the book value attributable to its sale shares was around S$36 million, added ST Engineering.

The group expects the divestment to result in a one-off gain on disposal of about S$77.2 million for the current financial year.

ST Engineering added that its share of CityCab’s net profit for 2024 stood at S$8.7 million, and that the taxi operator’s revenue was not consolidated into its financials since CityCab was equity accounted.

Upon receiving the S$116.3 million, the company will pay down its debt, resulting in interest expense savings of some S$4 million on an annualised basis, it noted.

CityCab began in 1995 with the merger of the taxi operations of the former Singapore Bus Service and Singapore Technologies Automotive, which in 1997 merged into ST Engineering.

Shares of CDG ended Monday at S$1.47, up S$0.02 or 1.4 per cent, while those of ST Engineering closed at S$7.61, down S$0.07 or 0.9 per cent, before the announcement.