GoTo plus Grab: The merger that neither needs and regulators don’t want

Simon Huang co-reported this story.

Four years after merger talks were floated between Grab and GoTo, the competing firms have reportedly reopened discussions.

A long-standing rivalry between the two might soon be coming to an end – if the talks come to fruition.

Under one scenario, Grab would acquire GoTo using a combination of cash and shares. This makes sense since Grab’s market capitalization – US$13.8 billion as of February 16 – is around double of GoTo’s.

However, the on-and-off nature of the firms’ exchanges in recent years is a sign that such a deal is easier said than done.

Gojek and Grab drivers in Indonesia / Photo credit: Shalstock/Shutterstock

Other factors – including both companies’ financial positions, regulatory concerns, and the complexities of combining two distinctly different operations – lengthen the odds even further.

So far, GoTo has denied reports of any such talks. In response to a query from the Indonesia Stock Exchange after reports of the discussions were published, the firm said that it was currently not having any merger-related dialogues with Grab.

Meanwhile, Grab has said that it doesn’t comment on “rumors or speculations.”

Ripe to do a deal?

On the surface, now would seem like a good time for GoTo to do a deal with Grab.

Gojek co-founder Kevin Aluwi stepped down from GoTo’s board of commissioners last year, making him the last of Gojek’s three co-founders to leave the company.

Patrick Walujo, who took over as CEO of GoTo in June 2023, is a co-founder of the Northstar Group, an early investor in Gojek. Unlike Andre Soelistyo, GoTo’s former CEO, Walujo was never part of Gojek’s original management team who might have seen a sale to Grab as capitulation to a rival.

Moreover, Walujo has not shied away from making decisive moves to improve GoTo’s prospects. The biggest example of this was his decision to cede to TikTok a controlling stake in the Tokopedia-TikTok Shop entity, despite the local player’s larger ecommerce presence in Indonesia.

Cash concerns not likely a deal trigger

Potential cost savings

Regulatory obstacles

‘Indonesian national champion’ no more?