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Business deals

N.Y. congestion pricing operator bought by Singapore company

Defense contractor ST Engineering revs up smart city business with $2.7bn deal

A traffic jam at an Indonesian toll gate in May: ST Engineering looks to bring TransCore's electronic toll collection and other systems to Southeast Asia.   © Reuters

SINGAPORE -- Singapore Technologies Engineering will buy U.S. transportation systems provider TransCore for $2.68 billion to bolster its urban mobility business, a recent area of focus for the state-linked defense manufacturer.

The deal, announced Sunday, represents ST Engineering's largest-ever purchase. TransCore is a major developer and operator of electronic toll collection, congestion pricing and other transportation services, and a technological leader in areas such as radio frequency identification, or RFID.

The American company is contracted to deliver a congestion pricing project in the New York City borough of Manhattan that will charge fees to drivers entering the city's busiest streets. The plan was put on hold with the resignation of New York Gov. Andrew M. Cuomo, but when installed, the proceeds will be used to upgrade the Big Apple's aging subway system.

TransCore is tasked with designing, building and operating the toll system equipment and infrastructure in the New York City region.

"The acquisition will accelerate ST Engineering's smart city growth and position it as a market leader in smart mobility," the Singaporean company said in a press release.

ST Engineering President and CEO Vincent Chong called TransCore "a strong strategic fit for us" and said its road transportation solutions will complement and enhance ST's suite of smart mobility rail and road solutions.

The acquisition is expected to be completed by March after receiving the go-ahead from shareholders at an extraordinary meeting. State investor Temasek Holdings, which owns 51% of ST Engineering, plans to approve the deal.

Beyond its mainstay defense equipment manufacturing business, ST Engineering in recent years has broadened its scope into new fields including cyber defense, urban mobility and energy management.

The company looks to bring TransCore's know-how to Southeast Asia in search of more opportunities. The global market for advanced transportation systems such as electronic toll collection is forecast to reach $15 billion in 2030, up from $8 billion this year.

These systems generate a steady flow of management income yearly, with little risk of contracts being switched to different providers partway through.

TransCore drew $565 million in sales in 2020 as well as $143 million in earnings before interest, tax, depreciation and amortization.

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