Singapore’s Grab and Indonesia’s GoTo had made headway on a potential deal structure, but the pace of talks had slowed recently over concerns about potential regulatory demands, Bloomberg News reported previously. Indonesia’s antitrust agency said in May it would look into potential risks and urged the companies to ensure any deal won’t create a monopoly.
Shares of Grab declined 1% in pre-market trading. The stock has advanced 41% in the past 12 months as Grab’s profitability improved, but remains down more than 50% since its listing in New York through a merger with a blank-check firm in late 2021.
Grab, which is backed by Uber Technologies Inc., has held on-and-off talks with GoTo for years. But a merger never materialised, partly because of antitrust concerns likely to arise from combining Southeast Asia’s two dominant ride-hailing and food-delivery companies. Uber left the region in 2018 in exchange for a stake in Grab, and smaller competitors haven’t eaten significantly into Grab and GoTo’s market share in Indonesia and Singapore.
Indonesia’s sovereign wealth fund Danantara has been considering a role in the combination, possibly helping to assuage concerns in the government resulting from the sale of the national tech champion, Bloomberg News reported last week.
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A potential sale of GoTo has sparked worries among Indonesia’s political leadership about the loss of independence and developer and engineer jobs. Some have also expressed concerns that ride-hailing and food-delivery prices would rise if Grab becomes dominant in a tough economy where consumers are already facing hardship.
Grab, the largest of Southeast Asia’s ride-hailing and delivery firms, has been locked in fierce competition with GoTo for almost a decade across Southeast Asia. The Singaporean company is the leading provider in its home market and countries including Malaysia and Thailand.
While the companies’ rivalry has weighed on their efforts to reach consistent profitability, they have benefited from user growth in the emerging economies they operate in. On-demand transactions value — including meal delivery — grew 19% in the two-month period covering April and May, versus a year earlier, Grab said in a separate release Monday.
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GoTo has pulled out from countries including Thailand and Vietnam after a fierce cost-cutting drive, but remains a formidable player in Indonesia — the region’s biggest market. Acquiring GoTo would give Grab a stronger position in the country of more than 275 million.
“We will continue to maintain a high hurdle rate when deploying our capital, and will have a balanced approach to investing for organic, profitable growth, and be highly selective on inorganic opportunities, in line with our capital allocation framework,” Grab said in its statement.
