There’s a rather shocking news going around that ASEAN ride hailing giants Grab and Gojek are discussing a possible merger. It came from The Information via Tech In Asia and cites sources familiar with the talks.
However, the two super app companies are still far from reaching an agreement as the respective valuations and post-merger shareholdings have to be ironed out, the report says. Apparently, Grab has told its investors that Gojek expects at least a 50% stake in the combined entity’s Indonesia business. Grab however wants overall control of the merged company across Southeast Asia.
This has been flatly denied by Gojek. “There are no plans for any sort of merger, and recent media reports regarding discussions of this nature are not accurate,” a spokesman told Tech In Asia. Grab declined comment.
Rumours of a merger between the region’s tech champions have picked up since the departure of Gojek’s co-founder and former CEO Nadiem Makarim last October. He is now Indonesia’s education and culture minister. The two companies have been competing fiercely and burning lots of cash while at it, providing subsidies to drivers/riders and to entice customers with promos.
Both companies must look towards profitability, and Asad Hussain, mobility analyst at PitchBook, says that a merger “could significantly accelerate both companies’ paths to profitability, creating significant value for investors.”
“[The two] have been locked in a price war as they compete for new users, which has come at the expense of margins, even as both companies face pressure from investors to show a path to profitability,” he adds. Profitability might sound good to the two companies list of big name backers, which include Toyota, Microsoft, Mitsubishi, Google and Singapore’s Temasek. Of course, Masayoshi Son’s SoftBank has hands in both pies.
The analyst says that a combined Grab-Gojek could create the world’s third-largest ride-hailing business by market valuation, after Uber and China’s Didi Chuxing.