Grab accelerates due diligence for GoTo acquisition amid regulatory concerns

In Hong Kong, Grab Holdings has initiated its efforts to acquire GoTo Group, a major competitor in Indonesia, through due diligence processes. These evaluations include scrutinizing GoTo's financial and operational accounts, as well as contractual obligations. The discussions come after a history of intermittent talks between the two companies, which had previously failed to culminate in a deal mainly due to antitrust concerns that would arise from merging two dominant tech entities in Southeast Asia. The formation of GoTo in May 2021, resulting from the merger between Gojek, a ride-hailing service, and Tokopedia, an e-commerce platform, has positioned it as a significant rival for Grab, which is backed by Uber Technologies. Market analysts indicate that the potential merger could consolidate a major share of the Southeast Asian on-demand services market, leading to potential monopolistic behavior that might deter regulatory approval. Despite regulatory hurdles, both companies are said to be contemplating how to structure and value the acquisition. Reports suggest that Grab's valuation for GoTo exceeds US$7 billion, with negotiations focusing on potential stock transactions at over 100 rupiah a share. Recent trends indicate a rising investor interest, as GoTo's shares saw a substantial increase, despite a broader downturn in the Indonesian stock market due to concerns about economic strength nationally. Furthermore, analysts foresee that while the talks between Grab and GoTo could potentially materialize by 2025, the actual merging of operations might attract fierce scrutiny from regulators and could lead to workforce reductions as a consequence of integrating the two companies. Nonetheless, as both Grab and GoTo witness a slowdown in growth, largely due to inflation-related consumer spending cuts, the urgency for strategic consolidations in the highly competitive market seems to be gaining momentum.