The Agreement This Month, The Gojek-Tokopedia Merger, Can Market Capitalization Of IDR 560 Trillion

JAKARTA - Two major Indonesian startups, Gojek and Tokopedia, are reportedly finalizing the requirements for their merger process. It is also reported that the agreement between the king of ride-hailing services and the king of e-commerce in the country will happen at the earliest in February.

This was stated by a source interviewed by Bloomberg, quoted on Wednesday, February 17. The two companies are currently discussing various scenarios with the aim of listing their shares on the stock exchanges of Indonesia and the United States.

The source also said that if this merger occurs, the market capitalization value will reach US $ 35 billion (Rp.490 trillion exchange rate Rp.14,000) to US $ 40 billion (Rp.560 trillion). The two startups plan to create an ecosystem for vehicle ordering services and digital payments.

The latest provisions under discussion require Gojek's shareholders to own around 60 percent of the combined entity, while Tokopedia investors hold 40 percent. Regardless of the ratio, the two companies approached the transaction as an equal merger.

One of the scenarios discussed was to combine the two companies before simultaneously listing them in Indonesia and the US. Another scenario is to register Tokopedia in Jakarta first, then join Gojek before registering a joint entity in the US.

Research Director of the Center of Reform on Economics (CORE) Indonesia Piter Abdullah assessed that the plan to merge two startups with decacorn and unicorn status, namely Gojek and Tokopedia, will not create a monopoly in the Indonesian digital market.

Piter stated that the merger between Gojek and Tokopedia was a strategic and tactical step because this action was carried out by two business entities that have different business segments, namely Gojek focusing on the ride-hailing business while Tokopedia optimizes the e-commerce market.

"The merger (Gojek-Tokopedia) if realized will not create a monopoly. They are in different business segments. In fact, this will complement each other and it is a very tactical strategy in dealing with this pandemic," Piter said as quoted by Antara.

Not only that, Piter said that the presence of the new merged company would not create a high barrier to entry for potential entry of new players, either working on new market niches or competing in the same field as the joint venture between Gojek and Tokopedia.

He explained that in digital-based businesses such as Gojek and Tokopedia the barrier to entry that usually overshadows every corporate merger action seems relatively low.

According to him, although they will become market leaders and have a large enough market share, this will not lead to unfair competition.

"Even now, even though both of them are grown, we can still see that there are similar players working on certain segments," he said.

Piter is optimistic that the merger of the two start-ups will be able to bring many benefits, especially for the growth of MSMEs and the Indonesian digital market.

This is supported by the fact that the two companies, which have a valuation of US $ 10.5 billion and US $ 7.5 billion respectively, have always supported the growth of MSMEs through the various business lines they operate.

"We have seen how people with a capital of Rp. 500 thousand can start trading on Tokopedia. That means the merger of the two companies will not kill MSMEs but on the contrary, it will provide room for MSMEs to grow," he explained.

In Tokopedia there are around 10 million partners and more than 1 million MSME partners who join Gojek in addition to the 1.5 million Gojek driver partners who serve online transportation and delivery services.