Gojek, Tokopedia in $18 billion merger talks for Indonesia’s biggest deal

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Indonesian ride-hailing and payments company Gojek and e-commerce leader Tokopedia are in advanced talks to secure a $18 billion merger before a possible dual listing in Jakarta and the United States, people who have knowledge of the matter has said.

A deal, which would be the largest yet for Indonesia, could change the landscape from the nation’s e-commerce market, whose growth has accelerated as stay-at-home pandemic restrictions have stoked demand for meals delivery and e-payments.

Bigger rivals in the space include Southeast Asian ride-hailing, food delivery and e-payments firm Grab, and Singapore-based regional internet firm Sea Ltd, which commands a market worth of $100 billion and functions e-commerce stage Shopee.

As a merged firm, decade-old start-ups, Gojek and Tokopedia would seek to expand market share and pursue profitability by offering services, such as grocery stores and courier services from a single platform.

It’ll pave the way for global growth and exits for several other high-growth start-ups from the region,” said Varun Mittal, head of emerging markets fintech company at E&Y.

Common investors in the pair, that can be Indonesia’s most precious start-ups, include Temasek Holdings Pte Ltd, Sequoia Capital and Google.

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Alibaba Group Holding and SoftBank Group Corp are one of Tokopedia’s shareholders, while Gojek’s include Warburg Pincus LLC and Tencent Holdings Ltd.

Three of those people with direct knowledge of the matter said Gojek and Tokopedia in late December agreed to conduct due diligence of one another’s business.

The founders and a few senior executives of Gojek and Tokopedia have been buddies for the past ten years and intention to finalise a deal in the first half, the people said.

The broad terms are largely agreed,” said one person.

Talks between the firms began in 2018, two people said. Negotiations accumulated momentum in November last year following weeks of merger discussions between Gojek and Grab faltered, ” they stated.

To finalise a bargain, Gojek and Tokopedia should thrash out merger ratios and seek approval from their boards.

The people said Gojek was valued at just over $10 billion and Tokopedia at about $7 billion. The combined entity would determine at the top 10 Indonesian firms by market value and become one of the largest Southeast Asian tech companies.

Each of the resources declined to be identified as the talks were personal. Gojek, Tokopedia and Grab declined to comment.

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A list of the combined businesses could raise up to $2 billion, two individuals said, in what might be one of the largest IPOs by an Indonesian business.

Reuters reported that Tokopedia received a merger approach from a blank-cheque acquisition firm. Tokopedia had stated an indirect record by means of a special purpose acquisition company was an option.

Gojek and Grab are both seeking to become one-stop stores for ride-hailing, food delivery and payments.

Tokopedia is a marketplace which, unlike the majority of its rivals, does not hold its own inventory.

Southeast Asia, with a population of about 650 million, expects to see its internet economy grow to $300 billion from an estimated $100 billion last year.

“In order to truly compete against Sea, Gojek and Tokopedia would have to demonstrate that they are more than an Indonesian business,” said Joel Shen, a tech lawyer at Withers.

“On the other hand, Gojek and Tokopedia are seen as homegrown tech champions.

Gojek has expanded in nations including Singapore and Vietnam, while Tokopedia’s Indonesian marketplace has more than 100 million monthly active users.

Bloomberg News previously reported merger discussions between Gojek and Tokopedia.

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The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Anshuman Daga in Singapore. Additional reporting by Kane Wu in Hong Kong, Aradhana Aravindan in Singapore and Radhika Anilkumar and Ann Maria Shibu in Bengaluru. Editing by Christopher Cushing and Barbara Lewis.

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