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The Cabcharge Australia Limited (ASX: CAB) share price falls on new acquisition

Shares in Cabcharge Australia Limited (ASX: CAB) fell 2.4% to $2.44 on Wednesday, after the company announced the acquisition of Mobile Technologies International (MTI), a provider of dispatch and booking software to the taxi industry.

Despite spending just $7 million on MTI, Cabcharge presented the acquisition as a significant strategic move towards the renovation of its dispatch and payment tools for taxi operators, aimed at enhancing service experience and enabling the company to compete with other personal transport companies.

This sounds like an obvious reference to rideshare companies like Uber, which recently disrupted the industry with their more technologically advanced offer.

However, the acquisition might also be a way for Cabcharge to establish a presence overseas, as MTI works with taxi companies in North America and in the UK, and owns and operates Mantax Taxis, the largest cabs network in Manchester.

The transaction should be completed by the end of the year, subject to the approval from the Australian Competition and Consumer Commission.

In fact, MTI provides its technology to most taxi networks in Australia, including Cabcharge’s competitors. In order to ensure that MTI doesn’t discriminate its other customers, Cabcharge intends to keep it as a separate entity, maintaining its existing management structure.

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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