ComfortDelGro seeks new M&A options after Uber fallout

Previous reports said it is in talks with Indonesia's Go-Jek.

Last week, ComfortDelGro Corporation (CDG) said it will no longer pursue the $642m deal for the 51%-stake in Uber’s wholly-owned car rental subsidiary in Singapore, Lion City Holdings, which operates Lion City Rental (LCR).

What then for CDG? Analysts have observed that the taxi giant continues to look for mergers and acquisitions (M&A).

Cezzane See from CGS-CIMB noted that the company still intends to enter the private hire vehicle space as it foresees the increasing convergence of private hire vehicles and taxis in the personalised mobility market. “We believe CDG made the move largely to tap on Uber’s private-hire client network and ride-hailing technology, but without that, the tie-up was rendered less attractive,” she said.

See raised the possibility of CDG entering a deal with Indonesia’s ride-hailing giant Go-Jek after the latter announced plans to enter Singapore and invest US$500m in it alongside three other countries.

“Recent local news reports quoted unnamed sources as saying that CDG and Go-Jek are in talks for a tie-up. In our view, Go-Jek’s passive management style could appear to be attractive to CD. However, the reports remain unsubstantiated, hence it is currently too premature to conclude on any possible partnership,” she said.

Maybank Kim Eng analyst John Cheong said in a report dated 14 May that CDG is “actively evaluating” many overseas M&A opportunities to grow its complementary businesses. “However, it remains disciplined on price by assessing the geographical risks and potential synergies,” he added.

Seven M&A deals announced since February 2018 are expected to be completed by the second quarter.

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