Southeast Asian ride-hailing giants Grab Holdings (NASDAQ:GRAB) and GoTo Group have rekindled discussions for a potential merger, according to Bloomberg. Reportedly, the talks are in the early stages, and some of the options being considered include Grab gobbling up GoTo in a cash, stock, or combination deal. The potential M & A mega-move could help both Grab and GoTo combine forces to overcome a steady stream of losses.
Further, top investors in both companies are said to be in favor of a deal. Still, a final deal may or may not happen. Other alternatives being considered include the two majors carving out markets between them, with Grab controlling Singapore (and other markets) and GoTo focusing on Indonesia. While valuation could be a sticking point, a deal could provide both companies with more pricing power and avenues for synergies. The two companies have unsuccessfully discussed a potential combination in the past.
Is GRAB a Good Stock to Invest In?
Grab’s stock price has plummeted by nearly 77% over the past three years. Indonesia-listed GoTo is also languishing at multi-year lows. While Grab has seen a steady uptick in its top line, the company is yet to churn out profits. Its fourth-quarter results are coming up on February 22, and analysts expect Grab to incur a net loss per share of $0.02 on revenue of $633.82 million. Overall, the Street has a Strong Buy consensus rating on Grab, and the average GRAB price target of $4.36 points to a substantial 31.3% potential upside in the stock.
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