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UPDATE 1-Comfort, DelGro shareholders vote for merger

(Recasts, adds details from conference)

By Katherine Espina and Peh Soo Hwee

SINGAPORE, March 19 (Reuters) - A merger to create Singapore's largest land transport group won shareholder approval on Wednesday, bringing together Comfort Group Ltd and DelGro Corp into a new entity with overseas ambitions.

The marriage of Singapore's dominant taxi operator, Comfort, and its main bus service provider will create a combined group to be known as ComfortDelGro Corp Ltd, with market capitalisation of around S$1.5 billion ($857.6 million).

It aims to grow its overseas taxi, bus and other transport businesses to 50 percent of revenue from more than 20 percent currently, ComfortDelGro chairman Lim Jit Poh told reporters.

"With our business activities spread over six countries, it is our aspiration that within the next five to seven years, we should target to have 50 percent of our turnover from abroad," Lim said.

Besides Singapore, the new group has transport operations in Britain, Ireland, Vietnam, Malaysia and China. Its market capitalisation makes it bigger than Singapore's dominant rail operator SMRT Corp .

THUMBS-UP FOR MERGER

The deal is expected to sail through court approval, although some investors said the terms appeared to favour DelGro shareholders.

Under the merger, Comfort shareholders would receive 1.245 shares of the new company for every Comfort share they own, while DelGro shareholders would get 3.342 shares for each DelGro share.

ComfortDelGro said it had received almost unanimous approval from shareholders of both companies for the merger.

Analysts and fund managers have said the combined group could be included in some benchmark stock indices and attract the attention of funds seeking exposure to the transport sector.

They said the merger would give the group a virtual monopoly of the Singapore taxi market with a fleet of more than 16,000 cabs, compared to its next major competitor, TIBS Taxi, which is owned by SMRT and has a 2,000-strong fleet.

"They would have higher bargaining power both in terms of taxi advertising and the purchase of vehicles," said Chong Wee Lee, analyst at Phillip Securities Research.

Chong also said the merger, which was announced last November, would allow the group to pursue further growth opportunities overseas, particularly in China's taxi market.

"Their leverage comes from the fact that they complement each other. Delgro's operations are mainly concentrated in northeast China compared to Comfort, which is concentrated in southeast China," he said.

Shares of both firms would be delisted and trading of the new company was expected to start on April 1. Both companies have asked for share trading suspensions to be lifted from Thursday. Comfort shares last traded at S$0.925 on Tuesday while DelGro shares ended at S$2.52.

($1=1.749 Singapore dollars)