SINGAPORE/HONG KONG, May 8 — United States (US)-listed ride-hailing and food delivery company Grab is looking to strike a deal to take over smaller Indonesian rival GoTo in the second quarter, said two sources with knowledge of the matter.
They said that Singapore-headquartered Grab has hired advisers to work on the proposed deal. The deal is subject to terms such as financing, which Grab is discussing with banks, one of the sources added.
Grab has declined to comment.
In a stock exchange filing on Thursday, GoTo said it has not made any decision regarding any proposals it may have become aware of or received.
According to a separate source with knowledge of the matter, a deal could value GoTo at around US$7 billion (RM29.97 billion). Jakarta-listed GoTo's shares have climbed 20 per cent year-to-date, giving it a market value of around US$5.8 billion (RM24.83 billion), LSEG data showed.
Grab's shares on Nasdaq are up 2.4 per cent so far this year, giving it a market value of nearly US$20 billion (RM85.62 billion), according to LSEG data.
Two sources familiar with the matter said GoTo will be selling off its international unit. In Indonesia, one of the two sources added that GoTo will sell its entire operations except its finance arm to Grab.
Deal terms are not finalised and could change as the two companies are still in negotiations, the sources cautioned.
Grab, backed by Uber, offers delivery, mobility and financial services, among others, according to its website.
GoTo, whose investors include SoftBank and Taobao China Holding, described itself on its website as Indonesia's largest digital ecosystem that provides e-commerce and banking services.
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A man walks past a Grab office in Singapore, on March 26, 2018. — Picture by REUTERS[/caption]
On-and-off talks
The merger talks between Grab and GoTo have been on-and-off for years but have not resulted in a deal, primarily due to competition concerns over a tie-up between two major players in Southeast Asia.
A merger between the two would create a giant in the ride-hailing industry in the region, dominating around 85 per cent of the US$8 billion (RM34.25 billion) market, according to data analytics company Euromonitor International.
"The combined entity would hold a market share of over 91 per cent in Indonesia, and almost 90 per cent in Singapore
"Markets especially in Indonesia and Singapore will impose strict scrutiny," said Euromonitor's insights manager of payments and lending in Asia David Zhang.
He added that regulators will likely block the deal in key markets in Southeast Asia.
Indonesian stockbroker BRI Danareksa Sekuritas' analyst Niko Margaronis, who covers GoTo, said that the Indonesian authorities may adopt a more pragmatic approach when assessing a potential merger, weighing the benefits of strengthening existing players and fostering long-term economic value.
Antitrust scrutiny has intensified significantly against the rising cost of living driven by an uncertain global economic outlook made worse by US President Donald Trump's tariffs.
In March, Uber terminated its US$950 million (RM4.06 billion) bid for Delivery Hero's Foodpanda business in Taiwan after Taiwan blocked the proposed deal on anti-competitive concerns and worries that it could incentivise Uber to raise prices.
— Reuters
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A Grab motorbike helmet is displayed during Grab's fifth-anniversary news conference in Singapore, on June 6, 2017. — Picture by REUTERS[/caption]
