Southeast Asia’s ride-hailing giants Gojek and Grab are holding discussions about a possible merger, The Information reported on Tuesday (Feb. 25), citing sources, but the companies are denying that those talks are taking place.
A merger would create one of the world’s most highly valued startups, with Gojek valued at $9 billion and Grab valued at $14 billion.
“There are no plans for any sort of merger, and recent media reports regarding discussions of this nature are not accurate,” a Gojek spokesperson told Tech in Asia. Grab declined to comment.
According to The Information's report, both companies' management teams - including Grab President Ming Maa and Gojek Co-CEO Andre Soelistyo – have had intense discussions about the possibility of a merger.
A merger between Grab and Gojek could make $16.7 billion in annual revenue and would hit a valuation of $72 billion by 2025, Tech in Asia estimated, which could put it in a prime position for an initial public offering (IPO).
Asad Hussain, a mobility analyst at PitchBook, told Tech in Asia that a Grab-Gojek merger “could significantly accelerate both companies’ paths to profitability, creating significant value for investors.”
A deal could face regulatory scrutiny, however. SoftBank-backed Grab's acquisition of Uber's Southeast Asian business was ruled to have violated Singapore's anti-competition laws.
Rumors of a merger come as Grab announces a new round of funding. The company just raised $856 million in funding from Japan's Mitsubishi UFJ Financial Group Inc (MUFG) and the IT services firm TIS Inc.
"MUFG's investment into Grab is a vote of confidence in our super app strategy and our ability to build a long-term, sustainable business," Maa said in a statement.
Hussain said a merger would be “transformative” for Southeast Asia’s ridesharing and food delivery business. After Uber and Didi Chuxing, a Gojek-Grab merger would create the world’s third-largest ride-hailing business by market valuation.
“Although the companies do not currently compete directly with Uber, a Grab-Gojek merger has the potential to create a formidable future global competitor to Uber, as the combined entity may seek to expand beyond Southeast Asia into Uber’s core markets,” Hussain said.
In December, Grab introduced the digital GrabPay Card, which is Asia’s first numberless card that is powered by Mastercard.