A potential merger between Southeast Asia’s ride-hailing giants Grab and Gojek is once again making headlines, with reports suggesting the Indonesian player could be valued at over US$7 billion.
While discussions of such a deal have emerged multiple times over the years, recent developments indicate a stronger possibility of the merger materialising.
A Bloomberg report suggests that an all-share transaction is being explored, potentially offering GoTo shareholders a 20 per cent premium over the pre-announcement share price. Grab’s strong stock market performance, with a 45 per cent increase in share value over the past year, enhances the feasibility of such a transaction.
In contrast, GoTo’s stock has stagnated, making the prospect of exchanging illiquid shares for Nasdaq-listed Grab stock an attractive option for investors.
Many of GoTo’s institutional investors, including SoftBank, are approaching the typical lifecycle end of their funds. These investors are under pressure to generate returns, and the illiquidity of the Indonesia Stock Exchange complicates their ability to exit. A merger with Grab would provide a more straightforward exit strategy.
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Maybank Investment Bank sees significant synergies from the potential merger, estimating annual cost savings and efficiency gains of between US$106 million and US$209 million by 2027. Improved driver utilisation, reduced incentives, and streamlined operations could contribute to an EBITDA margin increase for the combined entity.
Moreover, Grab’s dominance in food delivery and ride-hailing across ASEAN would be further cemented, while GoTo would secure a more stable position in Indonesia.
Despite financial and strategic incentives, regulatory challenges remain a key roadblock. The Indonesian Competition Commission has previously expressed concerns over monopolistic practices that could arise from the merger.
In response, Maybank suggests that regulatory scrutiny could be mitigated through structural adjustments, such as Gojek potentially exiting Singapore to reduce market concentration.
Indonesia’s political landscape could also influence the outcome. With President Prabowo Subianto prioritising foreign investment, a commitment from Grab to increase its investment in Indonesia may help ease regulatory concerns. However, past opposition from driver unions and the broader implications for market competition remain factors to watch.
If the deal proceeds, it would mark a significant milestone in Southeast Asia’s tech landscape. While regulatory barriers exist, financial pressures on GoTo’s investors and the potential for operational synergies suggest that, this time, the merger may have a better chance of crossing the finish line.
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