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P2P Transport Limited (ASX: P2P) has agreed to acquire taxi company Black & White Cabs (BWC) for $8.1 million, bringing P2P's total fleet up to 2,500 vehicles.
In a move to transition further from the outdated tech traditionally associated with the taxi industry, P2P will add 1,100 BWC owned and operated taxis to its network.
The transaction involves a $4 million cash consideration plus $4.1 million in P2P fully paid ordinary shares, funded through a combination of existing capital and a debt facility from one of the big four banks.
On completion of the buyout, P2P will acquire all brands, operational capabilities, assets, licenses and IP under the BWC umbrella.
The integration of BWC is expected to deliver cost savings in the medium term which will support a forecasted earnings before interest, tax, depreciation and amortisation (EBITDA) result of $3.5 million for FY19.
Managing director of P2P Tom Varga said the acquisition opens the company up to more flexibility in the industry.
"It marks an important step in the Australian market's transition from the slow and cumbersome legacy technology and platforms that have operated for decades and gives P2P a technology enabled platform that delivers innovation, improved service and a sustainable competitive advantage," said Varga.
"The combined business will deliver a passenger transport solution that will be competitively priced and delivers a range of new innovations a superior alternative dispatch platform to fleet operators and increased income for drivers that to date has not existed in the Australian market."
P2P will acquire BWC for an upfront purchase price of $8.1 million, plus potential contingent consideration of up to $12 million over the next two financial years.
The contingent consideration will be four times the amount of BWC's contributed EBITDA throughout FY19 and FY20, which is capped at the $2-3.5 million range.
After the deal is done, current managing director of BWC Greg Webb will join the board of P2P as an executive director.
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