Grab, the number one ride-hailing company for most Singaporeans has decided to seize (or rather, grab) the opportunity to buy private taxi operator Trans-Cab.
Negotiations for the acquisition between the two companies reportedly started about two months ago, and the transaction is expected to be completed this week after approval from the authorities.
The exact details of Trans-Cab’s purchase remain undisclosed, but the total amount of the purchase is estimated to be around US$100 million. The price includes Trans-Cab’s fleet of 2,200 taxis, of which 300 are private-hire vehicles the company owns. The purchase also entails the operator’s maintenance workshop and fuel pump operations.
Grab Had Plans to Acquire One of Singapore’s Taxi Companies Since 2017
If the deal is successful, Trans-Cab will be the first Singapore taxi company to be acquired by Grab. Currently, it is the 3rd largest taxi operator in Singapore, with the first being ComfortDelGro and the second being Strides Premier (a merger between SMRT Corp and Premier Taxis).
Previously, Grab had a few unsuccessful attempts to acquire a local cab operator in Singapore.
In 2017, before the Strides Premier merger in April 2023, Grab was in negotiations to acquire SMRT Corp.
Unfortunately, the deal was unsuccessful.
In 2022, Grab made another attempt to buy Prime Taxi, the smallest taxi operator in Singapore, but the deal once again saw little success.
Allegedly, the offers Grab made for both cases were considered “too small”.
But these previous endeavours beg the question, “Why is Grab being so, uh, grabby for local taxi companies?”
It turns out that Grab is aiming to maximise profits after having incurred losses since 2012, especially from its private-hire vehicle business. In its attempt to manage costs, it retrenched more than 1000 employees in June, amounting to 11% of its workforce.
By acquiring a local taxi company, Grab could resolve the problem of an industry-wide driver supply crunch, which has led to an increase in the price of hailing private-hire vehicles for its online platform.
Yee Wee Tang, managing director of Grab Singapore, said in a statement that by boosting the number of drivers on the platform and helping them to operate more efficiently, Grab can improve the speed and reliability of finding rides for passengers.
A Brief History of Trans-Cab Before Its Acquisition
About 20 years ago, the Singapore government liberalised the taxi industry to increase competition, thereby lowering the costs of hiring a taxi while increasing the amount of cab-hailing options for Singaporeans.
Trans-Cab was founded by Mr Teo Kiang Ang in 2003 promoting comfortable and accessible taxi services to the public. Soon after entering the market, Trans-Cab experienced a steady period of growth, and it exceeded MRT to become the second-largest taxi operator in Singapore by 2013.
After private-hire companies such as Uber and Grab gained popularity in Singapore and increased competition within the taxi industry, Trans-Cab began collaborating with Grab to expand its reach and offer more options to customers.
Before its acquisition, Trans-Cab had a total equity of $62.7 million by the end of 2020. As of 2021, it had acquired a net profit of $8.7 million and $81.1 million.
Some observers say that the acquisition of Trans-Cab will significantly hit the traditional taxi industry in Singapore since private hire companies such as Grab would face less competition now that a major competitor is out of the picture.
I guess you could say that acquisition really grabbed their attention.