Grab-GoTo merger talks face Indonesian regulatory hurdles, sources say

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By Stefanno Sulaiman, Yantoultra Ngui and Fanny Potkin Singapore-based Grab's NASDAQ:GRAB plan to acquire Indonesia's GoTo IDX:GOTO to create a dominant Southeast Asian ride hailing and food delivery company has run into regulatory hurdles, three sources said, casting a cloud over a potential deal.Reuters reported in May Nasdaq-listed Grab was looking to strike a deal to buy smaller rival GoTo in the second quarter and had hired advisers to work on the proposed acquisition. A deal could value GoTo at around $7 billion.The two companies now need more time to agree on a deal after the Indonesian government proposed some conditions for the plan to go through, said the three sources, who have knowledge of the deal discussions.The Indonesian government is examining how the potential merger would impact job welfare and market competition in Southeast Asia's biggest and most populated economy, said two of the sources.In May, hundreds of ride-hailing drivers and riders joined protests in several cities across Indonesia over low wages and to oppose a Grab-GoTo merger, fearing the creation of a monopoly that would lead to job cuts and raise prices for consumers.The government also wants the merged entity to guarantee more benefits, such as better fees and bonuses to riders and drivers, said one of the sources, who did not wish to be identified as the deal talks are confidential.Grab said last week it stood by its previous statement that it was not involved in any discussions for a potential transaction with GoTo and has not entered into any definitive agreements.Separately, Grab also raised $1.5 billion in a convertible notes offer, citing acquisitions among the capital's intended uses.GoTo, which is trading at a valuation of $4.4 billion, referred Reuters to its previous regulatory disclosures that there has been no agreement with any party about a potential transaction.Indonesia's transport ministry declined to comment.OPTIMISING OPERATIONSGoTo is 73.90%-owned by foreign investors, including SoftBank Group TSE:9984 and Taobao China Holding, a unit of China's Alibaba Group HKEX:9998, with the rest owned by Indonesian investors, according to its 2024 annual report.SoftBank's SVF GT Subco (Singapore) Pte Ltd and Taobao are GoTo's top two shareholders, holding 7.65% and 7.43% stakes, respectively, the report showed.When asked to comment on a potential deal involving ...

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