Seize, Gojek Reportedly Mentioned A Potential Merger For Previous Two Years

[Update: February 25, 2020, 2:35 p.m.]

In response to reports of the potential merger of Grab and Gojek, Gojek has stepped up to refute the allegations.

"There are no plans for a merger, and recent media reports of discussions of this kind are incorrect," said a Gojek spokesman.

In the meantime, Grab has declined to comment on the matter.

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The two largest hail and grocery suppliers in Southeast Asia, Grab and Gojek, are discussing a possible merger, according to The Information.

If this merger came about, they would create one of the most valuable startups in the world. Grab and Gojek are currently valued at $ 14 billion and $ 9 billion, respectively.

People familiar with the matter reported to The Information that the management of the two companies had held several meetings in the past two years and the discussions about the merger have become serious over the past few months.

It was reported that the last round of talks took place earlier this month, attended by Grab President Ming Maa and Gojek CEO Andre Soelistyo. Both sides are far from reaching an agreement.

The merger is still in the air, but a potential deal breaker would be who will control the merged company. If the deal takes place, Gojek is said to want a 50:50 deal, while Grab wants a significant majority.

Both companies are currently trying to reduce losses through "costly battles for market share".

According to a senior executive associated with one of these companies, hail fighting companies Ola and Uber have also entered into a similar agreement in India, reducing driver incentives and increasing prices.

However, a Gojek manager said that the strategy of lowering driver subsidies or increasing prices is considered "illegal" here. If they take such measures, both companies would be charged by regulators across the region for price fixing, he added.

Even when Grab took over Uber's Southeast Asian business in 2018, the competition watchdogs didn't make it easy for them – both were fined a total of S $ 13 million.

A possible bailout is Gojek's co-founder and ex-CEO Nadiem Makarim, who is now government minister. Could he be helping to influence the relaxation of anti-competitive rules in the country, presumably closer ties with the Indonesian authorities?

Is this merger between Grab and Gojek possible?

The possible fusion between the two authorizations was discussed intensively in the startup community.

It definitely makes business sense. A merged company would help increase efficiency and cost savings, as well as optimize key functions such as product, engineering and customer service.

With combined resources, they can also invest more in building a good customer experience instead of focusing on competition and subsidies.

Ultimately, this merger will create a company with higher value and impact. This is a win-win situation for businesses and consumers.

Since Gojek's foreign activities, like at home, have not yet been very successful, it would probably be wiser to direct resources back to Indonesia. In this case, the possibility of a merger could become a reality.

Selected image source: The Low Down