STOCK MARKET - JAKARTA. PT GoTo Gojek Tokopedia Tbk (GOTO) is rumored to be in talks with Grab Holdings Ltd about a merger.
According to Bloomberg, the merger aims to overcome the losses that both companies have suffered for years due to intense competition between them.
The two companies, which lead the food delivery service in a region with a population of more than 650 million people, are in early discussions about various merger scenarios.
One potential option is for Grab to acquire GOTO using cash, shares, or a combination of both.
A Bloomberg source said, GOTO is more open to the merger deal after Patrick Walujo took over as chief executive officer (CEO).
Capital market observer and Director of Avere Investama Teguh Hidayat said, the GOTO and Grab merger is driven in part by the tech winter that has hit global technology sector issuers.
GOTO's performance is still promising, but it has not yet been able to generate profit due to high operational costs. One effort to alleviate operational burdens is the collaboration between Tokopedia and TikTok.
“A merger with Grab could reduce operational costs and could help GOTO generate profit," Teguh told Kontan.co.id, Sunday (11/2).
According to Teguh, if the merger with Grab is not carried out, the Go-Jek business unit is likely to further burden GOTO's overall financial performance.
“Financing through share issuance is not easy, so GOTO must use other ways to alleviate operational burdens and increase capital," explained Teguh.
On the other hand, the issue of the GOTO and Grab merger is projected to kill similar companies in Indonesia. Because, these two tech giants could potentially monopolize the market share in Indonesia.
Teguh also mentioned, there is a possibility that the collaboration between TikTok and Tokopedia received government intervention. This is due to the government's ban on TikTok Shop which led to the collaboration with Tokopedia.
“With this privilege, GOTO's performance could further develop. However, there is a possibility of a monopoly in the technology sector, especially e-commerce and shuttle services," he explained.
Teguh recommends a hold for GOTO with a target price of Rp 100 per share-Rp 120 per share. “This is while we wait for its performance until it finally makes a profit through these two efforts," he explained.
CEO of Edvisor.id Praska Putrantyo said, GOTO with Grab could bring an increase in margin and added value to the issuer's overall business.
“This can have a positive impact on the improvement of the issuer GOTO's performance in the long term. GOTO itself is currently still in a trend of increasing the issuer's financial performance," Praska told Kontan.co.id, Sunday (11/2).
Meanwhile, the impact of the merger of the two companies for other technology sector issuers will be positive if the synergy is good.
“If the results are positive, it can also be a reference or positive catalyst for other technology sector issuers to synergize in order to minimize costs and maintain margins," revealed Praska.
Senior Investment Information at Mirae Asset Securities Indonesia, Nafan Aji Gusta advises investors to wait and see first about the merger plan of GOTO and Grab. “Because, this is still an issue. Wait and see first," he told Kontan.co.id, Friday (9/2).
According to Nafan, the performance of technology issuers in 2024 still relies on strong domestic consumption, so it continues to implement a strategy of increasing promotion. “This can provide opportunities and challenges for the growth of net profit margin," he revealed.
Nafan recommends a hold for GOTO with a target price of Rp 116 per share.