Taxi Operator, A2B Australia to acquire Gold Coast Cabs; Enters into an agreement with Regent Taxis

A2B Australia Limited (ASX:A2B) is headquartered in East Sydney, Australia; earlier it was known by the name Cabcharge Australia Limited. This company is engaged primarily in personal transport applications and other digital solutions provided to the taxi industry in Australia. A2B operates Australia’s largest Taxi network.

Today, 12^th April 2019, A2B Australia Limited informed the exchange that the company has entered into an agreement with the Regent Taxis Limited’s Board of Directors to acquire assets and business operations of Gold Coast Cabs.

Gold Coast Cabs is the largest regional Taxi Business in Queensland deploying 380 vehicles from the company’s centre in Helensvale.

The deal is subjected to the Regent Taxis’ shareholders and the Australian Competition and Consumer Commission’s (ACCC) approval. However, the above-mentioned agreement does not include the acquisition of Regent Taxis real property or its 23 taxi licences.

Further, the company highlighted the deal synergy. It believes that the merger will advance the company’s strategy of offering services on a national basis- this aspect of taxi operations has seen increased importance in the digital age. On top of this, the locals and the industry participants would benefit from a stronger and better resourced taxi service supported by A2B’s world-class technologies and booking platforms.

A2B is set to acquire the assets and business operations of Gold Coast Cabs for a total consideration of $2.5 million. The deal would further help A2B to consolidate the number of cars affiliated with A2B Australia’s Taxi network.

P2P Transport Limited, a competitor of A2B, operates 157 of the 380 taxis on the Gold Coast. Further, P2P had recently withdrawn ~200 taxis from the 13 cabs fleets in Sydney and Melbourne as part of P2P’s plan to remove their vehicles from third-party networks. A2B projects, Gold Coast Cabs fleet to grow from the current base of ~230 affiliated taxis.

This deal is expected to contribute revenue of around $5 million and an EBITDA of $1 million annually upon complete integration.

A2B’s CEO Andrew Skelton commenting on the deal, said that there are considerable opportunities for growth on the Gold Coast. He further highlighted that the population in the Gold Coast region is increasing. The planned $370 million Gold Coast Airport investment and the $50 million hotel investment points towards a continuation of investment and development in Gold Coast region. He stated that the company is all set to contribute to a corresponding growth in taxi services in the region.

Regent Taxis Chairman, Mr. Shane Smith, said that the direct access to the resources and expertise of A2B would aid local taxi operators to meet the expectations of stakeholders and increasing competition unfolding on the Gold Coast.

A2B has rewarded the shareholders 18.66 percent yield in the past one year. Further, the stock has delivered -4.05 percent, 1.43 percent, and -2.29 percent return in the past six months, three months, and one-month respectively.

The shares of A2B are trading at $2.090 on ASX (As at Fri 12 April 19, AEST 2:00 PM), down 1.88%. As per the lasted updated ASX data, the company commands a PE of 30.430x, with an EPS of $0.070, and current dividend yield of 3.76 percent.

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