Grab Holdings Ltd and Indonesia-listed GoTo Group have restarted talks for a merger to stop losses in the face of growing competition between Southeast Asia’s biggest ride-hailing companies, Bloomberg reported.
Citing people familiar with the matter, the report added that the two companies are in preliminary discussions about a variety of scenarios that include an option for Grab to acquire GoTo using cash, stock, or a combination of the two.
The other option under consideration is to split the main market with Grab gaining control of Singapore and some other markets while GoTo retains control in Indonesia, the report said.
Still, GoTo’s falling valuation besides deal structure and governance remains an area of concern, it noted.
The possibility of such a deal reportedly started when Patrick Walujo took over as GoTo’s chief executive officer last year and the talks reportedly began after GoTo relinquished control of its e-commerce unit Tokopedia to ByteDance Ltd.’s TikTok in December.
Sources mentioned in the report said the talks may not lead to a full merger. Bloomberg’s recent report also noted that major shareholders of both companies have been driving the talks.
“No such discussion is taking place,” said a GoTo representative as reported by Bloomberg. DealStreetAsia has reached out to GoTo and Grab for comments.
Grab and GoTo are easily the two biggest players in Indonesia and Singapore with newcomers unable to make a dent in their market share thus far.
Their fierce competition has kept prices low and a merger could help them raise rates. Bloomberg also noted that a bigger size—their combined worth is almost $20 billion—can help them become stronger in higher-margin services such as digital payments and banking.
Back in 2020, DealStreetAsia reported that ride-hailing companies Grab and Gojek—now part of GoTo Group—had agreed in principle to merge their operations. At the time, Grab reportedly offered Gojek a 30% stake in the merged entity while Gojek was pushing for a larger stake.
Since the earlier talks, a deal between Southeast Asia’s biggest internet companies has always attracted the regulator’s attention and is set to trigger antitrust concerns. This, however, did not stop investors from both sides from pushing for a deal in the past.