Maybank Investment Bank said Thursday that the potential merger deal between Grab and Gojek could lead to annual synergies of $106 million to $209 million and as such would be positive.

The research house said in a note that synergies may stem from operational efficiency gains from better driver utilization, and reducing incentives and fixed costs (cloud, marketing).

“Improved efficiency would enhance customer experience, allowing further incentive cuts,” it said.

It noted Grab’s current on-demand earnings before interest, taxes, depreciation, and amortization (EBITDA) margin as a percent of gross merchandise value (GMV) is 4.2 percent, while Gojek’s is about 1 percent.

“Assuming a merger, Grab+Gojek combined can increase the mergedco’s margin to 5.5 percent by FY27 (80 percent of the long-term blended segment adjusted EBITDA margin target of Grab), we see EBITDA upside of $106 million to $209 million over FY26-27 versus our current assumptions (Grab and Gojek segment EBITDA on a standalone basis),

“Assuming the potential merger is executed at our target on-demand enterprise value (EV)/GMV multiples of 0.9 times for Grab and 0.6 times for Gojek, we estimate a potential NPV increase of 8 percent to 9 percent for Grab and 3 percent to 5 percent for GoTo,” said Maybank.

Maybank sees the potential merger to have a positive outcome for Grab.

Besides synergies, it opined the massive scale would give Grab better pricing power (over the long term) and unit economics relative to the smaller operator.

Bigger scale would also help to introduce/integrate lifestyle services, such as restaurant reservation and healthcare services, it added.

Maybank also thinks the merger in the on-demand services will positively impact GoJek’s operations as it believes it will end the marketing war and make capital expenditure (capex)/ operating expenditure (opex) more efficient.

It also noted that it is too big for new players to challenge Grab and GoTo in Indonesia.

If the duo merge, Maybank foresees Grab remains the market leader in most of the ASEAN markets both in food delivery and ride hailing services.

It also highlighted that Gojek will have a material presence in Indonesia across food delivery/ride hailing and a small ride hailing presence in Singapore.

It is noted that Gojek exited Vietnam last year.

“On a combined basis, Grab and Gojek would have about 60 percent to 70 percent GMV market share across ASEAN and a highly dominant 80 percent to 90 percent market share in Indonesia,” it said.

However, Maybank noted the mergedco’s dominance would limit price increases due to regulatory scrutiny.

As Grab and Gojek would end up with a dominant market share of 60 percent to 70 percent across ride hailing and food delivery, it sees the deal would lead to high regulatory
scrutiny.

Based on its conversation with Grab, it said the firm noted that between regulatory scrutiny and valuations, the former remains the bigger challenge for any such merger and acquisition (M&A) initiatives.

According to Maybank, a potential tie-up could result in a near-monopolistic presence in Indonesia with 80 percent to 90 percent market share and an increased dominance in Singapore leading to regulatory challenges.

However, in the transport space (including public and rail), it said the market share in Indonesia would be about 11 percent to 23 percent and, as such, it thinks regulatory challenges in Indonesia are surmountable.

In Singapore, it thinks Gojek may exit before a potential merger.

“While regulatory challenges remain, we do see precedents in ASEAN (in other sectors) wherein regulatory clearances were given despite high market concentration,

“That said, we think with certain adjustments especially in Singapore, regulatory clearances remain potentially surmountable,” it said.

Meanwhile, Maybank sees an all-cash deal as unlikely.

According to the research house, two potential tie-up scenarios could be: Grab takes over Gojek and in return GoTo takes a stake in Grab (similar to the Uber/Grab deal); Grab and GoTo merge their on-demand businesses by taking proportionate stakes in the unlisted on-demand mergedco (similar to the Tokopedia-Tiktok Shop deal).

Bloomberg has recently reported that Grab is weighing a potential merger with GoTo at a valuation of more than $7 billion.

GoTo management, however, has denied this news and said it is market speculation.

“Even in a no-deal scenario, we maintain buy on Grab and GoTo as we see firm macro conditions and benign competition allowing for low mid-teens on-demand GMV growth while initiatives like ads, groceries and fintech etc create new growth/monetization avenues. Potential merger creates further upside,” said Maybank.

It is noted that based on its conversation with Gojek, the duo noted that they almost merged pre-initial public offering (IPO), but Go-Jek canceled the negotiation due to deal structures.

According to Nikkei Asia, the previous merger attempt was halted as Grab founders insisted on retaining the Chief Executive Officer position.

However, Maybank sees more flexibility for negotiation this time, particularly from GoTo’s side, given the founders’ reduced control over the company.

“This flexibility could be a positive catalyst, but we believe there is no immediate urgency for Grab to acquire GoTo,” it added.

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