GoTo shares jump to three-month high on report Danantara to be involved in Grab merger
The possibility of a failure or delay in the merger remains significant
[JAKARTA] GoTo Gojek Tokopedia shares surged to the highest level in three months, after an Indonesian government official said the South-east Asian nation’s sovereign wealth fund, Danantara, is set to be involved in a plan to combine its parent with rival Grab Holdings.
Shares of GoTo rose as much as 9.8 per cent, to the highest since Aug 13, after Indonesia’s State Secretary Prasetyo Hadi told reporters on Nov 7 that several ministries are also participating in the discussions about the potential deal between Grab and GoTo Group.
Grab, which is backed by Uber Technologies, has held on-and-off talks with GoTo for years, though a merger never materialised. Revived plans for a deal may raise antitrust concerns from combining South-east Asia’s two dominant ride-hailing and food-delivery companies.
Hadi’s remarks affirm that the proposed merger is still “on the table,” Ferry Wong, an analyst at Citigroup, wrote in a note. The combination of Grab and GoTo would potentially control over 90 per cent of Indonesia’s ride-hailing and food-delivery market, he said.
Spokespeople from Grab and GoTo did not immediately have comments. Danantara did not immediately respond to requests for a comment.
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.
Danantara had started preliminary discussions with GoTo to acquire a minority stake in a combined entity, Bloomberg News reported in June. The fund’s involvement was seen as a way to assuage concerns in the government resulting from the sale of the national tech champion.
The possibility of a failure or delay in the merger remains significant, Citigroup’s Wong said. The deal remains under discussion with no definitive agreement in sight, he said.
GoTo’s shares have declined 7 per cent this year.
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“With Grab still holding over US$5 billion in cash, the optionality of a deal was always on the table,” said Mohit Mirpuri, a senior partner at SGMC Capital “With government coordination through Danantara, the prospect of a state-blessed merger adds a new dimension to Indonesia’s digital ecosystem.” BLOOMBERG
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