Gojek and Tokopedia inch towards merger ahead of public listing

According to people with knowledge of the matter, Indonesia’s two most valuable startups, ride-hailing giant Gojek and e-commerce provider PT Tokopedia, are finalizing terms for their merger and aiming to reach an agreement as early as this month.

The two companies are discussing a variety of scenarios with the goal of ultimately listing the combined entity in both Jakarta and the U.S., said the people, asking not to be identified because the negotiations are private. The target valuation in the public markets is between $35 billion and $40 billion, one of the people said.

Representatives of Gojek and Tokopedia declined to comment.

The two startups plan to create an Indonesia internet powerhouse, at the leading edge of businesses from ride-hailing and digital payments to online shopping and delivery. Bloomberg News first reported their merger talks in January.

The latest terms under discussion call for Gojek shareholders to own about 60% of the combined entity while Tokopedia’s investors hold 40%, said the people.

Regardless of the ratio, both companies are approaching the transaction as a merger of equals, they said.

One of the scenarios being discussed is to combine the two companies before concurrently listing them in Indonesia and the U.S., one of the people said.

Another scenario is to list Tokopedia in Jakarta first, then merge with Gojek before a listing of the combined entity in the U.S. The companies have yet to decide whether they’d opt to list in the U.S. via a traditional initial public offering or a special purpose acquisition company.

The talks are ongoing and it’s possible they take longer or fail to lead to a final agreement.

Gojek Is Said in Talks With Tokopedia for $18 Billion Merger

The two Indonesian tech pioneers have common investors, including Google, Temasek Holdings Pte and Sequoia Capital India. Their founders have also been friends since their inception more than 10 years ago.

If the combined Gojek-Tokopedia proceeds with an IPO, it would give global investors another opportunity to bet on one of the world’s fastest-growing internet economies.

Tokopedia is also backed by Alibaba Group Holding Ltd., which has its own e-commerce unit in the region, Lazada.