Shares of SMRT are expected to rise to a record on optimism Singapore's largest subway operator will be acquired by a rival after a report said ComfortDelGro Chairman Lim Jit Poh suggested a merger.
Lim's proposal followed the government’s suggestions on how to increase the use of public transport, local media reported.
“SMRT is being seen as the takeover target and investors are betting on a controlling premium should a bid materialize,” said Nicole Sze, investment analyst at Bank Julius Baer &Co in
A merger would help the companies reduce costs by combining their routes and streamlining operations, resulting in the creation of the largest land-transport company in an island-state that's trying to optimize its limited land space as the population and industries expand.
Lim's other proposal was for one company to operate bus services and the other to run
“Ultimately, the model should be one that will provide good service to fully support the infrastructural needs of Singapore and its future developments,” SMRT said in a statement April 20. “Having operated trains and buses for over five years, we have grown to understand the synergistic benefits
of a multi-modal model, and this is our preferred mode.”
ComfortDelGro, which was formed from the union of Comfort Group and DelGro in 2003, is the operator of the world's second-largest fleet of buses, taxis and rental vehicles. Its SBS Transit unit operates the northeast train line in
“Singapore's a small market, so some sort of rationalization will strip costs and boost the bottom line,'' said Daphne Roth, vice president of equity research at ABN Amro Private Banking in Singapore. “There's no real competition anyway.”
Should we look forward to such a merger or be wary? Will a monopoly over land transport better
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