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Cabcharge departs Aust bus market

AAP logoAAP 21/12/2016

Cabcharge is moving out of Australia's bus industry.

The company, which has the largest taxi fleet in Australia, has agreed to sell its 49 per cent stake in Australia's largest private bus company ComfortDelGro Cabcharge for $186 million to joint venture partner ComfortDelGro.

Cabcharge says the CDC stake was identified as a non-core asset during a strategic review as part of efforts to expand in the increasingly competitive personal transport market.

"The sale of Cabcharge's stake in CDC is an important strategic milestone for the company and monetises the value of a minority interest in a non-core asset that was not returning cash to Cabcharge," chairman Rick Millen said.

Mr Millen said the board is evaluating how the sale proceeds will be used, with priority to be given on cutting debt and growth initiatives.

Chief executive Andrew Skelton said the personal transport industry has gone through major regulatory and competition changes, and the company expects the market to continue to grow, driven by population, mobile and tourism.

Ride sharing service Uber has been a major disruptor in the taxi industry.

"We know that to capture the tailwinds of this growing market, in terms of both trips and electronic payments, we must evolve and invest. The transaction allows us to make strategic investments that will reward our shareholders over the long term, Mr Skelton said.

Cabcharge expects to book net proceeds of $183 million on the stake sale, which is expected to be wrapped up late February 2017. The company has held the stake since 2005.

Cabcharge shares gained two cents to $3.89.

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