ComfortDelGro to buy out Aussie subsidiary for $195m

A double-decker bus in Sydney operated by ComfortDelGro Cabcharge, which runs a fleet of 1,712 buses. The deal will beef up ComfortDelGro's portfolio in Australia to around $525.5 million - its largest overseas investment destination.
A double-decker bus in Sydney operated by ComfortDelGro Cabcharge, which runs a fleet of 1,712 buses. The deal will beef up ComfortDelGro's portfolio in Australia to around $525.5 million - its largest overseas investment destination. PHOTO: COMFORTDELGRO

Transport giant ComfortDelGro will fully acquire its Australian subsidiary, ComfortDelGro Cabcharge (CDC), as it deepens its already considerable presence in the country.

The Singapore-listed firm will pay A$186 million ($195 million) for the remaining 49 per cent stake in CDC, giving it full control over the company, which runs a fleet of 1,712 buses in New South Wales and Victoria and hires around 2,300 people.

"(The acquisition) reflects our commitment to the Australian market and our continued confidence in its growth potential. Through a wholly owned subsidiary, we are better able to seek new opportunities to grow the business," ComfortDelGro chief executive Kua Hong Pak said in a statement yesterday.

The acquisition is expected to be sealed in the first quarter next year, pending regulatory approval in Australia. The deal will beef up ComfortDelGro's portfolio in Australia, where the company has already invested around $525.5 million - its largest overseas investment destination.

In December 2014, it spent $27.8 million to acquire the Blue Mountains Bus Company, an operator with 101 buses and coaches in New South Wales.

This came after other key deals, including a $26.2 million investment in the Driver Group in Victoria in July 2013 and an outlay of $69.2 million in the Deanes Bus Lines in Canberra in August 2012.

  • ComfortDelGro's recent overseas acquisitions

  • DEC 21, 2016
    ComfortDelGro Cabcharge in New South Wales (NSW) and Victoria, Australia: $195 million, 1,712 buses

    DEC 1, 2014
    Blue Mountains Bus Company in NSW, Australia: $27.8 million, 101 buses and coaches

    JULY 1, 2013
    Metroline West in Britain: $111.1 million, 494 buses

    JULY 1, 2013
    Driver Group in Victoria, Australia: $26.2 million, 42 buses

    AUG 31, 2012
    Deanes Bus Lines in Canberra, Australia: $69.2 million, 97 buses

    SEPT 30, 2010
    Swan Taxis in Perth, Australia: $49.2 million, 1,667 vehicles in network

ComfortDelGro, which is one of the biggest land transport operators in the world, also has a sizeable footprint in Britain, its second-biggest overseas investment destination with $417.2 million invested.

The most recent key deal in Britain was the $111.1 million acquisition of Metroline West in July 2013, giving ComfortDelGro command over a fleet of 494 buses.

The diverse geographical exposure is one of the reasons DBS Vickers named ComfortDelGro a key transport stock to watch next year.

"We expect ComfortDelGro's dividend per share to grow with its lower capital expenditure requirements. Its strong balance sheet avails it the capacity to undertake acquisitions to supplement growth," DBS Vickers added in an outlook report recently, giving the company a $3.09 target price.

A version of this article appeared in the print edition of The Straits Times on December 22, 2016, with the headline 'ComfortDelGro to buy out Aussie subsidiary for $195m'. Print Edition | Subscribe