Tokopedia and Gojek are Getting Closer to Merger Agreement

The plan to merge Gojek and Tokopedia seems to be getting closer to reality. The merger of the two companies is estimated to create a business valuation of up to US$ 35 billion to US$ 40 billion or more than IDR 560 trillion if it is listed on the stock exchange. With such a large valuation, several parties have analyzed whether there will be a potential for market monopoly if this merger materializes.

According to a study by the Executive Director of the Institute for Competition and Business Policy Studies, Faculty of Law, University of Indonesia (LKPU FH UI), Ditha Wiradiputra, the merger does not have the potential to monopolize the market or result in monopolistic practices because the two companies are in different markets.

“It will not affect the increase in the market share of Gojek or Tokopedia because both of them are engaged in different business fields. Because there is no effect, the merger action will not affect the market concentration of each entity as a result of the merger,” said Dhita through his statement, Tuesday (16/2/2021).

According to him, the merger action will cause problems if the merger involves entities from similar business fields, for example Gojek with Grab or Tokopedia with Shopee. If that happens, it is possible to trigger market concentration. “They will also have a large market power so that they can play prices arbitrarily. The impact is that it can harm consumers,” said Dhita.

Opens Great Opportunities for Cooperation with many Parties

Mergers also do not result in vertical integration or vertical monopoly, because the Gojek and Tokopedia business models are open ecosystems whose strategy is to open the widest possible opportunity for cooperation with many parties to achieve scalability.

One way of doing this is by accepting many payments and delivery options on each platform. Concerns about vertical integration, in which control over the production of services and goods are considered to not occur because the nature of the two platforms from the start is not exclusive.

Mergers carried out based on efficiency basically bring new benefits such as new value or added value, both for consumers and business actors, as well as creating efficiency in the market as a whole.

This should be welcomed as a form of digital economic growth in Indonesia. “Operational costs could have been reduced, and in the end it would cut production costs for the two companies, so that it could have a positive impact on the output that could be produced,” Ditha emphasized.

Between the Merger Scenarios to the IPO

Two startups Gojek and Tokopedia are finalizing plans for a merger. In its development, the merger of the two unicorns will be completed at the earliest this month. Tokopedia and Gojek are discussing various scenarios that can be taken to realize the listing or listing of shares, both on the Indonesian and United States (US) stock exchanges.

The first scenario is whether to merge before listing. The second is whether Tokopedia will IPO first in Indonesia, followed with the merge with Gojek and then bring the new entity to take the floor on the US stock exchange.

In addition, it is still being discussed whether listing on the US stock exchange will be carried out through the traditional IPO mechanism, or through a blank check company (Special Purpose Acquisition Company / SPAC).

An unnamed Bloomberg source said that the company’s valuation in the capital market is targeted to reach between USD 35 billion and USD 40 billion, or around IDR 560 trillion (exchange rate of IDR 14,000). Reportedly, the combination of the two companies will create an Indonesian internet giant that controls the ride-hailing, digital payments, online shopping and shipping sectors.

The issue of the mega-merger of Gojek and Tokopedia first blew up in January 2021. The plan for this new entity is that 60 percent of the shares will be held by Gojek investors and 40 percent by Tokopedia investors.