Gojek owner GoTo’s rebound may extend after CEO vote as Grab merger eyed

Singapore – Shares of GoTo Group are seeing signs of new life on hopes that its new leadership – approved on Dec 17 – will help pave the way for a

long-awaited merger with larger rival Grab Holdings

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GoTo’s stock has risen about 20 per cent in Jakarta so far this quarter, beating global ride-hailing and delivery peers. Support from major shareholders and the Indonesian government for a takeover by Grab has helped drive a turnaround after years of underperformance.

At a meeting on Dec 17, GoTo shareholders approved the appointment of Mr Hans Patuwo as chief executive officer, replacing Mr Patrick Walujo, who was seen as an obstacle for a deal with Singapore-based Grab. A new CEO may speed a transaction that would create a South-east Asian technology sector powerhouse.

“The two companies together would make a much bigger entity – it would have a much bigger scale and more market share,” said Aletheia Capital analyst Angus Mackintosh. “It would be a massively dominant animal.”

GoTo – which offers services from transport and food delivery to online shopping and financial services – had been considering the merger as an option as it struggled with profitability. Even with the recent stock rebound, GoTo’s market value has plunged to less than US$5 billion (S$6.5 billion) from a high of more than US$30 billion shortly after its listing in 2022.

Co-founders of the company and prominent investors including SoftBank Group pushed for the ouster of Mr Walujo, who took the helm in 2023.

Indonesia’s sovereign wealth fund Danantara is among those now trying to facilitate a deal with Grab, lending a stamp of approval from the nation’s leaders.

The business outlook has brightened somewhat, with GoTo raising its guidance and analysts projecting it will turn a profit in 2026.

Still, “in the near term, M&A (mergers and acquisitions) sentiment is outweighing fundamentals”, Macquarie Group analyst Ariyanto Jahja wrote in a note last week. Government support plus likely board changes have made a merger more probable, he added.

Uber Technologies-backed Grab is expected to post a profit in 2025, though it too has struggled with periods of red ink since it listed in New York in late 2021. It has been eyeing a deal with GoTo in order to improve its operating leverage.

A merger would “help Grab strengthen its market share in the South-east Asia region” and discourage any potential competitors, Citigroup analyst Alicia Yap wrote in a report in November.

It could lead to cost savings by allowing the companies to lower discounts they offer customers, which would increase margins, she added.

While a combination would be good for profits, it has sparked concerns in Indonesia about higher prices for consumers and possible job losses. A merged Grab and GoTo would potentially control over 90 per cent of the nation’s ride-hailing and food-delivery market, according to Citi analyst Ferry Wong.

In that context, “Danantara’s participation may ease monopoly concerns”, he wrote in a Nov 24 note. “While execution risks remain, we believe the management restructuring would improve the likelihood of regulatory approval for a merger.” BLOOMBERG