Grab Stock Climbs Premarket After Report Of GoTo CEO Ouster Plan, Fueling Potential Merger

• Indonesia’s government announced late last week that it is in talks with two ride-hailing and delivery companies regarding a potential deal.
• GoTo has lost nearly 40% of its valuation since Walujo took charge, who is also reportedly opposed to the Grab takeover.
• Any merger between the two firms could help the combined firm to bolster its margins, as they have resorted to aggressive discounts to gain market share.

Grab (GRAB) stock gained 1.2% in premarket trading on Tuesday after a report stated that a group of investors, including SoftBank, is considering replacing Indonesian ride-hailing firm GoTo's Chief Executive Officer, Patrick Walujo, which could pave the way for a merger between the two firms.

According to a Bloomberg News report, citing people familiar with the matter, several GoTo shareholders signed a memo to the board requesting an extraordinary general meeting. The report stated that the backers, which include some of GoTo’s co-founders, are proposing a vote on matters including replacing the CEO. The company has lost nearly 40% of its valuation since Walujo took charge, who is also reportedly opposed to the Grab takeover.

Why Does It Matter To Grab?

Grab and GoTo have held talks on a potential merger several times, but they have yielded little progress. However, takeover rumors have gathered steam once more after Indonesia’s government announced last week that it is in talks with the two ride-hailing and delivery companies about a potential deal.

As per the report, the country’s sovereign wealth fund, Danantara, will likely be involved in a plan to combine the companies, with the fund beginning to explore a minority stake in a combined entity early this year. GoTo’s board reportedly said Monday it has scheduled an extraordinary shareholder meeting for Dec. 17, without specifying the meeting’s agenda.

The meeting isn’t related to “any planned corporate actions” and “is part of our corporate governance procedure and should not be a cause for concern,” GoTo said. With regards to a potential deal with Grab, “no decision or agreement has been made,” it stated.

Any merger between the two firms could help the combined firm boost its margins, as they have resorted to aggressive discounts to gain market share. While Uber, which holds a stake in Grab, exited the fiercely competitive Southeast Asian market, other smaller competitors are throwing a challenge to the bigger players amid economic weakness in some economies.

What Are Stocktwits Users Thinking?

Retail sentiment on Stocktwits about Grab was in the ‘bearish’ territory at the time of writing.

Grab stock has gained 24.7% this year. On Monday, it said that it is investing $60 million in remote-driving technology provider Vay Technology in exchange for a minority equity stake in the startup. Earlier this month, the company raised its annual earnings forecast after posting a 23% rise in revenue from the deliveries segment.

Also See: Why Is Crypto Exchange Gemini Space Station’s Stock Falling Nearly 9% Premarket?

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Share

·

Add us on