Grab Eyes GoTo Acquisition in Q2 Amid Regulatory Hurdles

Grab Holdings Ltd. is aiming to acquire Indonesian tech firm GoTo Group in the second quarter of 2024, according to two sources familiar with the matter.

Credit: GRAB

The Singapore-based ride-hailing and food delivery company has hired advisers and is in talks with banks to secure financing for the proposed deal.

The acquisition could value GoTo at around USD 7 billion. Currently, GoTo has a market capitalisation of approximately USD 5.8 billion, following a 20% rise in its share price this year, according to LSEG data.

Grab, listed on Nasdaq, has seen its shares increase by 2.4% so far this year, giving it a market value of nearly USD 20 billion.

As part of the deal, GoTo is expected to sell off its international unit. In Indonesia, Grab would acquire all of GoTo’s operations except its financial services arm, according to one of the sources.

The terms of the deal are still under negotiation and may change, the sources said.

Grab, backed by Uber, offers services in delivery, mobility and finance. GoTo, whose investors include SoftBank and Taobao China Holding, operates Indonesia’s largest digital ecosystem, providing e-commerce and banking services.

Merger discussions between Grab and GoTo have occurred intermittently over the years but have not resulted in a deal due to competition concerns.

A merger would create a dominant player in Southeast Asia’s ride-hailing market, controlling about 85% of the USD 8 billion industry, according to Euromonitor International.

In Indonesia alone, the combined entity would hold over 91% market share, and nearly 90% in Singapore, said David Zhang, insights manager of payments and lending in Asia at Euromonitor.

Zhang noted that regulators in Indonesia and Singapore are likely to impose strict scrutiny, and the deal may be blocked due to antitrust concerns.

However, Niko Margaronis, an analyst at BRI Danareksa Sekuritas, suggested that Indonesian authorities might take a pragmatic approach, considering the potential long-term economic benefits.

Regulatory scrutiny in the region has intensified amid global economic uncertainty and rising living costs.

In March, Uber withdrew its USD 950 million bid for Delivery Hero’s Foodpanda business in Taiwan after regulators blocked the deal over anti-competitive concerns.

---

• Grab is seeking to acquire GoTo in Q2 2024

• Deal could value GoTo at around USD 7 billion

• GoTo to retain its financial services arm in Indonesia

Source: REUTERS