Grab & GoTo said to restart talks for ride-hailing ‘mega-merger’

SINGAPORE: Talks of a merger between Grab Holdings Ltd. and GoTo Group, the largest ride-hailing firms in Southeast Asia, have restarted. This could mean a coming together of two companies that have seen losses over the years due to the intense rivalry between them, reported Bloomberg on Friday (Feb 9).

Some news outlets call the potential union between Singapore’s Grab and Indonesia’s GoTo a “mega-merger,” as the two companies have a duopoly in the region.

The two companies reportedly began initial talks of a merger in 2020 after Mr Nadiem Makarim, the founder and former head of Gojek, left the company in October 2019. Analysts said at the time that a merger would hasten both companies’ paths to profitability.

However, the discussions were stalled after the two companies could not come to an agreement over Indonesia, obviously a key market for both.

Bloomberg reported that Grab has declined to comment on the news of the latest discussions between the two ride-hailing companies and quotes a GoTo representative as saying that “no such discussion is taking place.”

People who are familiar with the matter told Bloomberg that the two companies have begun discussing a number of scenarios for the merger, including one where Grab may acquire GoTo using cash, stock, or both.

GoTo is said to be more amenable to the merger since last year when Patrick Walujo began to helm the company.

At this point, the sources said talks are still on and off. However, Grab and GoTo’s shareholders are said to support the merger and are the active force behind the discussions.

The sources added, however, that in the end, it’s possible that the talks won’t lead to any deal or a full-blown merger, but that the companies may discuss separating the main markets where they operate “with Grab gaining control of its Singapore home base and some other markets, while GoTo retains control in Indonesia.”

Bloomberg pointed out that the two companies have a combined worth of S$26.94 billion but that a merger would come under “intense scrutiny by regulators.”

News of the revival of merger discussions between Grab and GoTo comes just a few days after it was reported that Delivery Hero, Foodpanda’s parent company, said that negotiations for its sale with Grab in certain markets in Southeast Asia are still ongoing, contrary to rumours that talks have collapsed.

Delivery Hero issued a statement on Feb 2, debunking the rumours, saying, “There are market rumours that the negotiations for the potential sale have collapsed. We confirm that the negotiations for the potential sale are ongoing, and, thus, the rumours are false.” /TISG

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