Singapore group's $39m Swan Taxis offer

The sedate world of Perth's taxi service has been jolted by a $38.8 million takeover bid for Swan Taxis by global transport giant ComfortDelGro.

Singapore-based ComfortDelGro claims to be the second biggest transport company in the world with 44,000 vehicles, including a huge bus fleet in the east coast of Australia via a joint venture with Cabcharge. It is also has a 7.5 per cent shareholding in Cabcharge, as well a seat on the board.

Swan Taxis, a former cooperative which corporatized three years ago, dominates the Perth market of around 1.5 million people offering a dispatch service for 1,667 taxis representing 91 per cent of the total metropolitan fleet.

By comparison, ComfortDelGro operates 15,200 taxis in Singapore representing 63 per cent of the fleet in the city state of about 5 million people.

A spokesperson for ComfortDelGro said the group was attracted to the business as an extension to its existing competency in taxis and geographic representation in Australia.

The group sees synergies in operating in Perth, though the taxi model is quite different from Singapore where it owns its vehicles. ComfortDelGro also owns a taxi business in the UK which operates more closely to the WA model of a dispatch service.

ComfortDelGro's spokesperson said it was too early to comment on potential plans, especially as the bid had not yet been successful.

Swan Taxis chairman and managing director Kevin Foley said Swan had not been up for sale but had been approached by the Singaporeans.

Mr Foley said the bid had come after about three months of discussions and due diligence.

He said he thought ComfortDel Gro was a good fit for the Swan business and he was confident that shareholders would accept the first opportunity they have had to convert their stake to cash, some of them after 30 or 40 years of interest in the business.

Swan has approximately 900 shareholders holding 220,045 shares, valued by the offer at almost $176 each.

It is understood there is a handful of bigger shareholders with stakes of 4000 to 5,000 shares, valued between around $700,000 to $880,000.

Mr Foley said that he believed ComfortDelGro had realised the growth potential in WA compared to other parts of the world.

Swan is clearly a profitable business, making a pre-tax profit of $4.6 million for the 12 months ending June 30, 2009, on revenue of $13.3 million for that period.

As the dominant player in the WA industry, it has benefited from high growth in the taxi sector in Perth which has expanded dramatically from 1113 taxis to more than 1850 vehicles since about 2004. Its only significant rival is Black & White Taxis which is controlled by a group of St Georges Terrace stockbrokers and investment bankers.

Black & White's shares are held by interests linked to Adam Rankine-Wilson, John Georgiades, Darryl Smalley, Gary Cox and David Argyle, who acquired his stake in August last year.

Interestingly, Mr Argyle's stake was previously owned by a Singaporean company.

See full statement from ComfortDelGro below:

16 July 2010 - ComfortDelGro Corporation has made a A$38.8 million (S$46.8 million) takeover bid for Swan Taxis Limited, the largest provider of taxi services in the Perth metropolitan market with 1,667 taxis or a 91% share of the market.

If successful, the move will further extend ComfortDelGro's presence in Australia where it is already one of the largest private bus operators in New South Wales and Victoria.

ComfortDelGro's offer is for all the shares and options in Swan Taxis, which has been in existence since 1928. Originally a co-operative, it was restructured to an unlisted public company in 2007. Besides operating in Perth, Swan Taxis also provides bureau despatch services in Karratha, a town located 1,500 km north of Perth and Mandurah, the second largest city in Western Australia located 72 km south of Perth. For the 12 months ended 30 June 2009, Swan Taxis turned in a revenue of A$13.3 million and profit before tax of A$4.6 million.

As required by the Australian Corporations Act 2001, ComfortDelGro and Swan Taxis have lodged a Bidder's Statement, a Target's Statement and the Independent Expert's Report with the Australian Securities and Investment Commission. These documents, together with an offer letter from ComfortDelGro, will be sent to all shareholders in two weeks' time. Thereafter, shareholders will have seven weeks to accept the offer, which is conditional upon approval from the regulatory authorities. A compulsory acquisition of all shares will be made once the minimum threshold of 90% acceptances is reached.

With the population of Perth expected to continue to grow, the prospects for the taxi industry in the city are bright.

Mr Kua Hong Pak, ComfortDelGro Managing Director and Group CEO, said: "Swan is the leading taxi operator in Western Australia with an advanced despatch system and a strong customer base. We are excited about the prospects that this proposed acquisition offers us - a geographical expansion and extension of another of our core businesses in Australia."