SEAToday.com, Jakarta - Indonesia Stock Exchange-listed technology company PT GoTo Gojek Tokopedia Tbk (GOTO) and US Nasdaq-listed Grab Holdings Ltd (GRAB) are reportedly reopening a potential merger with an estimated market capitalization of Rp304.66 trillion. 

In terms of market capitalization, GOTO recorded a market cap of IDR 100.92 trillion as of 7 February 2024. Grab has a market capitalization of US$12.99 billion or equivalent to Rp203.74 trillion (JISDOR exchange rate of Rp15,685). Thus, if the two merge, the market capitalization is estimated to reach Rp304.66 trillion.

However, the market capitalization of both has fallen considerably compared to when they first IPOed. GRAB pocketed IPO funds of US$4.5 billion or around Rp64 trillion, with a market valuation of US$39.6 billion or equivalent to Idr578.4 trillion.

GOTO's market cap has continued to shrink since it was first traded on the Exchange. On its inaugural day on the IDX, GOTO's market cap touched IDR 400 trillion and IDR 466 trillion.

Despite having the potential to have a large market capitalization, each company has recorded contrasting performance both in terms of stock and financial performance as of Q3/2023. 

GOTO is still recording a net loss and has recorded a decline in share price on a year-to-date basis, while Grab has recorded positive EBITDA and provided positive returns to shareholders on a YTD basis.

Grab, which is listed on the Nasdaq, is observed to have posted a positive return year to date. On Friday (9/2/2024), Grab shares were at US$3.43 per share and have risen 3.94% compared to the position at the beginning of January at US$3.30 per share. 

Meanwhile, GOTO shares fell 2.33% year to date to Rp84 per share. GOTO had risen to its highest YTD position at Rp92 per share. 

Aside valuation matters which become a hurdle to any deal, the two companies are still exploring any benefitting scenarios. According to Bloomberg, the companies have also explored 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.

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.

Grab and GoTo have held on-and-off talks to combine without success in the past, after years of fierce competition in ride-hailing, food delivery, and financial technology. A few years ago, the duo made substantial progress toward a deal, but talks waned as they clashed over how to manage key market Indonesia. (ALIF/DKD)