*

GoTo to sell off international unit in Singapore to Grab,

sources say

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Deal is subject to financing, one source says

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Combined entity would become a ride-hailing giant in

Southeast

Asia

(Updates May 7 story with GoTo's response made via stock

exchange filing on May 8 in paragraph 4)

By Yantoultra Ngui, Kane Wu and Fanny Potkin

SINGAPORE/HONG KONG, May 7 (Reuters) - U.S.-listed

ride-hailing and food delivery company Grab is looking

to strike a deal to take over smaller Indonesian rival GoTo

in the second quarter, two sources with knowledge of

the matter said.

Singapore-headquartered Grab has hired advisers to work on

the proposed deal, the two sources added. The deal is subject to

terms such as financing, which Grab is in discussion with banks,

one of the sources added.

Grab declined to comment.

In a stock exchange filing on Thursday, GoTo said it has not

made any decision regarding any proposals it may have become

aware of or received.

A deal could value GoTo at around $7 billion, according to a

separate source with knowledge of the matter. Jakarta-listed

GoTo's shares have climbed 20% year-to-date, giving it a market

value of around $5.8 billion, LSEG data showed.

Grab's shares on Nasdaq are up 2.4% so far this year, giving

it a market value of nearly $20 billion, according to LSEG data.

GoTo will be selling off its international unit, two

separate sources familiar with the matter said. In Indonesia,

GoTo will sell its entire operations except its finance arm to

Grab, one of the two sources added.

Deal terms are not finalised and could change as the two

companies are still in negotiations, the sources cautioned.

Grab, backed by Uber ( UBER ), offers delivery, mobility and

financial services, among others, according to its website.

GoTo, whose investors include SoftBank and Taobao China

Holding, described itself as Indonesia's largest digital

ecosystem that provides e-commerce and banking services, its

website showed.

ON-AND-OFF TALKS

The merger talks between Grab and GoTo have been on-and-off

for years but have not resulted in a deal, primarily due to

competition concerns over a tie-up between two major players in

Southeast Asia.

A merger between the two would create a giant in the

ride-hailing industry in the region dominating around 85% of the

$8 billion market, according to data analytics company,

Euromonitor International.

"The combined entity would hold a market share of over 91%

in Indonesia, and almost 90% in Singapore," said David Zhang,

Euromonitor International's insights manager of payments and

lending in Asia.

"Markets especially in Indonesia and Singapore will impose

strict scrutiny," he said, adding that the deal will likely be

blocked by regulators in key markets in Southeast Asia.

Indonesian stockbroker BRI Danareksa Sekuritas' analyst Niko

Margaronis, who covers GoTo, said that the Indonesian

authorities may adopt a more pragmatic approach when assessing a

potential merger, weighing the benefits of strengthening

existing players and fostering long-term economic value.

Antitrust scrutiny has intensified significantly against the

backdrop of rising cost of living driven by an uncertain global

economic outlook made worse by U.S. President Donald Trump's

tariffs.

In March, Uber ( UBER ) terminated its $950 million bid for Delivery

Hero's Foodpanda business in Taiwan after Taiwan

blocked the proposed deal on anti-competitive concerns and

worries over it could incentivize Uber ( UBER ) to raise prices.