Indonesia’s Gojek in talks with Tokopedia for US$18 billion merger, sources say

Ride-hailing and payments giant Gojek and local e-commerce pioneer Tokopedia are Indonesia’s two most valuable start-ups

They are in advanced discussions about merging ahead of a planned initial public offering of the combined entity, sources say

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A Gojek driver rides his motorcycle through a business district street in Jakarta, Indonesia on June 9, 2015. Photo: Reuters

Published: 12:08pm, 5 Jan 2021Updated: 10:44pm, 5 Jan 2021

Indonesia’s ride-hailing and payments giant Gojek is in advanced discussions about merging with local e-commerce pioneer Tokopedia, ahead of a planned initial public offering of the combined entity, according to people with knowledge of the matter.

The country’s two most valuable start-ups have signed a detailed term sheet to conduct due diligence of each other’s business, said the people, who asked not to be named as the discussions are private. Both sides see potential synergies and are keen to close the deal as soon as possible in coming months, they said.

The merged entity would create an Indonesian internet powerhouse with a combined valuation of more than US$18 billion. Its businesses range from ride-hailing and payments to online shopping and delivery – a local mash-up of Uber Technologies, PayPal, Amazon and DoorDash. It plans to go public in the US and Indonesia.

Gojek and Tokopedia have considered a potential merger since 2018, but discussions accelerated after deal talks between Gojek and arch-rival Grab Holdings reached an impasse, the people said. Grab chief executive officer Anthony Tan continues to resist pressure from SoftBank Group’s Masayoshi Son to give up some control in a combined entity with Gojek, said the people.

Southeast Asia’s two most valuable start-ups – together worth about US$25 billion – held on-and-off talks to combine after years of fierce competition in ride-hailing, food delivery and financial technology. As recently as December, the companies were said to have made substantial progress in working out a deal to combine, people with knowledge of the talks told Bloomberg News at the time. But they clashed over how to manage Indonesia, the key market in the region.

Son, who had been a steadfast supporter of Tan in the past, is losing patience with the Grab co-founder’s reluctance to cede some control and is now supporting a merger between Gojek and SoftBank-backed Tokopedia, the people said. The two home-grown tech pioneers have common investors, including Google, Temasek Holdings and Sequoia Capital India.