The tech rumor mill has been churning as two of Indonesia’s biggest tech start-ups have been surfacing in headlines. Gojek, Indonesia’s multiservice platform that highlights its ride-hailing and digital payment features, has allegedly been in talks with one of Indonesia’s e-commerce pioneers, PT Tokopedia. According to Bloomberg, sources familiar with the matter say that the discussion has been on the table for quite a while and they are now in advanced discussions.

It was also mentioned that there are also plans for the two companies to go into an initial public offering (IPO) shortly after finishing the prospective $18 billion merger. Gojek is currently valued at around $10.5 billion, while Tokopedia stands at around $7.5 billion. The speculated merger will allow the two companies to integrate their features into a super app that will consist of ride hailing, e-commerce, delivery, fulfillment,  and e-wallet features. Sources have said that the two may go public with their IPO in Indonesia and maybe even the USA.

In December 2020, Tokopedia got Citigroup Inc., and Morgan Stanley to act as advisers for their plans in going public in the near future. They also announced that they have yet to decide which market and what methods they would follow. They also mentioned an option to utilize a special-purpose acquisition company (SPAC) in exploring the planned listing in the USA.

Competitive past

Talks between these two Indonesian tech giants are not new, though. The two companies were actually eyeing a merger as early as 2018. However, Gojek was also negotiating with rival ride-hailing app, Grab Holdings Inc., within the same time frame. This was probably what was holding back Gojek from further pursuing Tokopedia at that time. But as talks with Grab went awry due to Grab CEO Anthony Tan refusing to give even an inch to their competitor, negotiations between Gojek and Tokopedia quickly gained momentum.

Masayoshi Son, Chief Executive Officer of SoftBank Group Corp, had been trying to convince Tan to consider a merger with Gojek. However, it seems that Son is now distancing from Grab and supporting a merger between Gojek and Tokopedia, which is also being backed by SoftBank.

Speculative future

Sources have also mentioned that this merger is a move forward to make sure that their companies would be able to compete with a company like Singapore’s Sea. Having already gone public, Sea has a very strong IPO pipeline. Their ability to gather $3 billion from public markets just last December goes to show how much of a force they can be in the Southeast Asian market. With fresh capital only an arm’s reach away, Sea would have the ability to expand to different services and countries. It seems that the potential Gojek and Tokopedia merger would be a step towards creating a company formidable enough to face this giant later on.

When asked for comments on the merger, Gojek refused to answer, and Tokopedia said that the company would not be commenting on any speculations.

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