Grab and GoTo are said to revive talks for ride-hailing mega merger
👉 Southeast Asia’s biggest ride-hailing companies, $GRAB (Grab Holdings Ltd) and GoTo Group, have restarted talks for a merger, a potential blockbuster combination aimed at staunching years of losses at both companies resulting from tough competition between the two.
👉 The companies, also the food-delivery leaders in the region of more than 650 million people, are reportedly in preliminary discussions about a variety of scenarios. One potential option is for Singapore-based Grab to acquire GoTo using cash, stock, or a combination of the two, one of the people said, adding that the Indonesian company is more open to a deal after Patrick Walujo took over as CEO last year.
👉 The talks may not lead to a full-blown merger or any deal. Options the companies have explored also include splitting up their main markets, with Grab gaining control of its Singapore home base and some other markets, while GoTo retains control in Indonesia.
👉 Each company has tens of millions of ride-hailing users, and a merger could help them raise rates and find synergies in major markets such as Indonesia where competition has kept prices low. A bigger size could also help the combined entity become stronger in higher-margin services such as digital payments and banking.
👉 A deal between Southeast Asia’s most valuable internet companies — together worth almost $20 billion — would face intense scrutiny by regulators. The companies are the clear No. 1 and No. 2 in countries such as Indonesia and Singapore, and a merger could give them a dominant position in some markets. $UBER (Uber Technologies Inc.) left the region in 2018 in exchange for a stake in Grab, and smaller competitors have yet to make a major dent to Grab and GoTo’s duopoly in their top markets.
👉 Competition between Grab and GoTo has kept prices for consumers very low in countries like Indonesia. In Southeast Asia’s biggest market where the regulator also actively ensures rates are affordable, a scooter ride can cost less than $1 and a car trip isn’t much more. That’s left the ride firms with pressure to expand in adjacent services such as deliveries and digital payments.
👉 Grab and GoTo have considered a potential merger before in recent years. This time around, discussions restarted after GoTo relinquished control of its e-commerce unit Tokopedia to ByteDance Ltd.’s TikTok in December, one of the people said. That arrangement makes Grab and GoTo a potentially stronger match, they said.
Read more âť“ www.bloomberg.com/news/articles/2024-02-09/grab-goto-are-said-to-revive-talks-for-ride-hailing-mega-merger
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