Grab, a Singaporean ride-hailing and food delivery service, has signed an agreement for its car leasing division, Grab Rentals, to acquire Trans-cab, the third-largest taxi operator in the city-state.
Grab’s first acquisition of a local competitor, the transaction is expected to conclude in the fourth quarter of 2023 and will include “Trans-cab’s taxi and car rental business, maintenance workshops, and fuel pump operations.” Trans-cab was founded in 2003 with a fleet of 50 vehicles and made two attempts to go public. It currently operates more than 2,500 vehicles.
According to a report by The Straits Times, the acquisition’s value is estimated to be around $75 million, although the terms of the transaction were not disclosed.
According to the Nasdaq-listed ride-hailing behemoth, the acquisition will enable Grab to provide a larger pool of drivers. Grab desires to address Singapore’s driver shortage, which has manifested in increased fares due to a demand-supply imbalance.
Grab Singapore’s managing director, Yee Wee Tang, said in a statement, “By increasing the number of drivers on our platform and assisting them in operating more efficiently, we will be able to provide passengers with rides more quickly and reliably whenever they need one.”
The acquisition occurs less than a month after the Southeast Asian smartphone operator laid off over a thousand employees, or approximately 11% of its workforce.
Trans-cab drivers will join the Grab platform and receive the same benefits as current Grab drivers, such as free coverage through Grab’s Personal Accident Insurance and access to the GrabAcademy program, which teaches drivers data analytics and digital marketing. In addition to receiving rewards through loyalty programs, couriers will also receive rewards.
Grab intends to digitize the business by integrating its driver application with Trans-Cab’s mobile display devices. Grab’s technology will allow taxi drivers for Trans-cab to manage their earnings and receive bookings from Grab’s platform and Trans-cab’s existing contact center.
Jasmin Tan, general manager of Trans-cab, stated, “Consumer behaviors have shifted, and we’ve recognized for some time the need to digitize the business and ensure our taxi drivers remain competitive.”
In the tech industry, consolidation through mergers and acquisitions is on the rise as a result of constrained private capital and a sluggish initial public offering market due to the economic downturn, which has been impacted by rising inflation and high-interest rates.
In April, Singapore’s SMRT announced that its ride-hailing operator, Strides Taxi, would merge with Premier Taxis to create a combined fleet of approximately 2,500 taxis, making it the second-largest taxi operator in the country. ComfortDelgro controls approximately 60% of the taxi market in Singapore, with a fleet of approximately 8,800 taxis.