The deal, Grab’s first acquisition of a local competitor, is expected to close in the fourth quarter of 2023 and covers “Trans-cab car and taxi rental businesses, maintenance workshops and fuel pump operations.” Established in 2003, Trans-cab started with a fleet of 50 taxis and tried to go public twice. Now operates a fleet of over 2,500 vehicles.
The financial terms of the deal were not disclosed, but according to a report by The Straits Timesthe size of the acquisition is estimated at around $75 million.
The Nasdaq-listed ride-hailing giant said the acquisition would enable Grab to provide a broader driver base. Grab wants an address Singapore’s driver shortage problem as ride demand recovered after the city state lifted pandemic restrictions.
“By increasing the number of drivers on our platform and helping them operate more efficiently, we are increasing how quickly and reliably we find a ride for our passengers whenever they need one,” said Yee Wee Tang, managing director of Grab Singapore, in a statement.
The purchase comes just a month after the Southeast Asian dine app operator laid off more than a thousand employees, or about 11% of its staff.
Trans-taxi drivers will join the Grab platform and receive the benefits provided to current Grab drivers, including free coverage through Grab Personal Accident Insurance and access to the GrabAcademy program, which helps drivers learn skills, including data analytics and digital marketing. Rewards through the loyalty program will also be given to drivers.
Grab plans to integrate its driver app into the Trans-cab mobile display unit to digitize the business. Grab’s technology will enable Trans-cab taxi drivers to manage their revenue and receive orders from the existing Grab platform and Trans-cab call center.
“Consumer behavior has changed and we realized that for some time we needed to digitize our business and ensure our taxi drivers can continue to be competitive,” said Jasmin Tan, general manager of Trans-cab.
Consolidation through mergers and acquisitions is on the rise in the technology industry as private capital is tight and the market for initial public offerings is slow due to an economic downturn impacted by rising inflation and high interest rate barriers.
In April, SMRT Singapore announced online transportation operator Stepping Taxi will join Main Taxi to unite a combined fleet of around 2,500 taxis, becoming the country’s second largest taxi operator. ComfortDelgro has around 60% market share in Singapore, with a fleet of around 8,800 taxis.