Ride to nowhere? The Grab-Gojek story thus far

THE proposed merger between South-east Asia's two largest ride-hailing companies is now off the table, close to a year after reports of the negotiations first surfaced. The potential union had the market abuzz with talk of shareholder pressure, final deal terms, anti-competitive concerns and public backlash. The Business Times (BT) looks at the ups and downs over the last year.

Feb 24-25, 2020: Merger talk surfaces

US news outlet The Information reported that Grab and Gojek are mulling a merger that would create one of the world's most valuable startups. When asked about the report, Gojek denied any merger talks to BT on Feb 25. 

"There are no plans for any sort of merger, and recent media reports regarding discussions of this nature are not accurate," the Gojek spokesperson had said then. Grab had declined to comment.

Industry observers flagged to BT that while the deal may look feasible on paper, there are several significant obstacles. 

Sept 13-15, 2020: Hiatus, then a spark

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Merger talks did not surface in the next few months, as both Grab and Gojek battled the Covid-19 pandemic and made layoffs. But on Sept 13, the Financial Times reported that Grab and Gojek have resumed discussions at the urging of SoftBank's Masayoshi Son, as well as other shareholders. 

Just a day later, Alibaba was said to be in talks to invest US$3 billion in Grab, part of which would be used to acquire some of the Grab stock held by US ride-hailing firm Uber Technologies. 

However, observers saw that Alibaba's entry could intensify antitrust concerns related to a Grab-Gojek merger.

There was also plenty of scepticism. One observer speculated that the discussions may have been deliberately leaked to strengthen the negotiating power of certain parties.

Oct-Nov 2020: E-wallet war adds intrigue

As hype around a Grab-Gojek merger intensified, the e-wallet battle between both firms in Indonesia added a fresh layer of complexity. Major players Dana and Grab-backed Ovo were said to be edging closer to a merger – a move interpreted as Grab trying to one-up Gojek's e-wallet, GoPay. 

In November, Grab emerged as the lead investor in another Indonesian e-wallet, LinkAja. Grab and Gojek were said to have been competing for the deal; both firms declined to comment on this. 

Dec 2020: A deal in the works?

Bloomberg reported that Grab and Gojek are closing in on the terms for a merger. A day later, Grab's chief executive Anthony Tan tells staff in an internal note that the company is in a position to make acquisitions and is financially strong despite the tough year.

The pandemic might have made clearer who the dominant player is, market watchers told BT. With rising competition from stock market darling Sea Ltd and a tech rally fuelling IPO optimism, the reasons for a union were beginning to look more attractive.

Dec 15, 2020: Backlash

News of a possible merger between the decacorns upset many of the over four million  motorbike operators and riders that serve them in Indonesia. Thousands threatened protests amid fear of mass job losses. BT reports that adequate protection and legal certainty will be key to the continuation of Indonesia's booming gig economy.

Dec 18, 2020: Muscling up in financial services

Capturing Indonesia's large and lucrative unbanked and underbanked market has long been the refrain of both firms, and was likely to be a key source of negotiating power. On Dec 18, Gojek pumped 2.25 trillion rupiah (S$215 million) to up its stake in Indonesian digital bank Bank Jago to 22.2 per cent. The following month, Grab announces that it has raised US$300 million for its fintech unit, reportedly valuing it at US$3 billion. 

2021

Jan 5, 2021: Gojek finds a new suitor? 

Talk surfaced that Gojek and Tokopedia have signed a detailed term sheet to conduct due diligence for a merger, ahead of a planned IPO of the combined entity, according to Bloomberg.

Observers noted that if the merger - with a combined valuation of about US$18 billion - goes ahead, it would mean a tougher fight for Grab to dominate Indonesia, the crown jewel of South-east Asia. 

Natural synergies between Gojek and Tokopedia could pose a threat to Grab, observers told BT. 

Jan 18-25, 2021: Grab to go it alone, picks banks for US IPO

Reuters reported that the ride-hailing giant is mulling an IPO in the US this year, in an exercise that could raise at least US$2 billion. Grab, which was most recently valued at more than US$16 billion, joins a handful of other prominent regional startups aiming for the public markets. 

On Jan 25, it surfaced that Grab has picked banks Morgan Stanley and JPMorgan Chase & Co for the potential US IPO. Reports said that the listing could happen as soon as the second half of 2021.

Jan 29, 2021: Grab, Gojek confirmed to part ways

It appears to be the end of the road for Grab and Gojek as both firms ceased their attempt to merge.

A well-placed source told BT that the two sides have not been able to see eye-to-eye on a number of issues, including valuation and corporate cultures. The possible merger also created a public backlash in Indonesia, particularly from motorcycle riders who feared loss of income as many of them serve both firms.

Read more:

• Why the Grab-Gojek ride was not meant to be