Welcome to the latest edition of top stock market highlights.
ComfortDelGro Corporation Ltd (SGX: C52)
ComfortDelGro Corporation, or CDG, announced that its wholly-owned subsidiary in Australia, ComfortDelGro Corporation Australia Pty Ltd, has sealed an agreement to acquire all the shares of A2B Australia Limited (ASX: A2B).
The cash offer price is A$1.45 and values A2B at A$182 million.
A2B is an Australian taxi network and is also a major technology and payment solutions provider for the personal transport industry.
It offers a booking dispatch platform called MTI and the Cabcharge payment solution along with taxi service brands 13cabs and Silver Service.
Currently, CDG and its subsidiaries own a 9.25% stake in A2B.
The consideration for the remaining 90.75% stake in A2B amounts to A$165.1 million and will be funded by existing cash reserves and bank loans.
The consideration does not include the payment of a special dividend by A2B of A$0.60 per share.
The scheme of arrangement does, however, require approvals from various parties such as A2B shareholders, the Australian court, the Australian Stock Exchange (ASX), and clearance from the Australian Competition and Consumer Association.
If approved, the transaction is expected to close in the first half of 2024.
Sumitomo Life and Singlife
One of the largest insurance deals in Asia has just been announced.
Sumitomo Life Insurance Company has offered to buy a 35% stake in Singapore Life Holdings (“Singlife”) from TPG and make an offer to the remaining shareholders.
This transaction values Singlife at S$4.6 billion and Sumitomo Life intends to fully acquire the insurance outfit.
Singlife has total assets of around S$14.4 billion, ranking it as one of the top six insurers in Singapore.
Sumitomo Life intends to retain Singlife’s existing operations, name, brand, and management team so customers of Singlife should expect no disruptions.
Singlife CEO Pearlyn Phau believes that this transaction will be beneficial for the company as Singlife will have a simpler shareholder structure and can rely on Sumitomo Life’s funds to support its business expansion.
Following this purchase, Sumitomo Life plans to set up a local office in Singapore in April next year to strengthen its relationship with Singlife and conduct more research in the region.
There is also the possibility that Sumitomo Life may set up a regional headquarters in Singapore to further expand in Asia.
Singapore’s core inflation
With 2023 ending soon, there is more good news on the inflation front.
Core inflation for November came in at 3.2%, in line with a Bloomberg poll of economists.
This level was marginally lower than the 3.3% core inflation registered in October.
The slightly lower reading was because of a slower rise in prices for retail goods, food, electricity, gas, and transport.
Headline inflation declined to 3.6% year on year for November, a sharp drop from the 4.7% logged just a month earlier.
Both the Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS) maintained that core inflation should come in between 2.5% to 3% at year-end.
Core inflation, however, should rise early next year with the expected increase in the Goods and Services Tax (GST) rate from 8% to 9% on 1 January 2024.
Despite this, both MTI and MAS believe that import cost pressures will decline and tightness in the labour market will ease, leading to a downward trend in prices as the year passes.
For 2024, core inflation is expected between 2.5% to 3.5% while overall inflation should come in between 3% to 4%.
With inflation cooling, there is a good chance that MAS may ease up on its monetary policy to allow the Singapore dollar to appreciate to curb imported inflation.
The easing of monetary policy may even take place from July 2024 onwards.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
