Gojek, Grab Renew Merger Talks With SoftBank’s Support
Shareholders, including Japan-based SoftBank, which first invested in Grab six years ago and in several later funding rounds, have urged the startups to return to the table, FT reported. These latest discussions come as rivals Gojek based in Jakarta, Indonesia, and Grab, based in Queenstown, Singapore, continue to lose money amid pandemic restrictions.
Previous merger talks stalled, in part, due to opposition from SoftBank, according to FT. But now, SoftBank founder and CEO Masayoshi Son is backing the deal.
Formerly, sources had told FT that Son was convinced ridesharing would be a monopoly industry, and the company with the most cash would dominate.
But Gojek has proved a resilient rival. As a result, sources told FT Son is now among the biggest champions of a merger.
A merger “could significantly accelerate both Grab and Gojek’s paths to profitability,” Asad Hussain, an analyst at PitchBook Data, a Seattle-based research company, told FT.
But Kenny Liew, a technology analyst at Fitch Solutions, a London-based data, research and analytics company, said it’s unlikely regulators will approve the deal, FT reported.
“At a time when many economies are struggling, a merger will unlikely gain traction with regulators given that jobs will likely be cut,” he told FT.
Roshan Raj, a partner for Redseer, a management consulting company in India, said both companies were riding high pre-pandemic as they raised commissions that they charge drivers and reduced customer discounts.
“COVID-19 disrupted these trends in a material way,” Raj told FT. “A revival in ride-hailing could be some time away.”
In March, investors asked SoftBank to make the Grab and Gojek merger a reality.
“The forces at play here are higher than simply what Grab or Gojek want, or indeed don’t want,” said one Grab investor at the time. “This is about a number of long-term influential shareholders in both companies who want to either stem the losses or find a way to exit their investments.”