*

Indonesian government wants GoTo to be majority-owned by

locals

*

GoTo is 73.9% owned by foreign investors, including

SoftBank and

Taobao

*

Combined entity to have over 91% market share in

Indonesia,

Euromonitor says

By Stefanno Sulaiman, Yantoultra Ngui and Fanny Potkin

JAKARTA/SINGAPORE, June 19 (Reuters) - Singapore-based

Grab's plan to acquire Indonesia's GoTo to

create a dominant Southeast Asian ride hailing and food delivery

company has run into regulatory hurdles, three sources said,

casting a cloud over a potential deal.

Reuters reported in May Nasdaq-listed Grab was looking to

strike a deal to buy smaller rival GoTo in the second quarter

and had hired advisers to work on the proposed acquisition. A

deal could value GoTo at around $7 billion.

The two companies now need more time to agree on a deal

after the Indonesian government proposed some conditions for the

plan to go through, said the three sources, who have knowledge

of the deal discussions.

The Indonesian government is examining how the potential

merger would impact job welfare and market competition in

Southeast Asia's biggest and most populated economy, said two of

the sources.

In May, hundreds of ride-hailing drivers and riders joined

protests in several cities across Indonesia over low wages and

to oppose a Grab-GoTo merger, fearing the creation of a monopoly

that would lead to job cuts and raise prices for consumers.

The government also wants the merged entity to guarantee

more benefits, such as better fees and bonuses to riders and

drivers, said one of the sources, who did not wish to be

identified as the deal talks are confidential.

Grab said last week it stood by its previous statement that

it was not involved in any discussions for a potential

transaction with GoTo and has not entered into any definitive

agreements.

Separately, Grab also raised $1.5 billion in a convertible

notes offer, citing acquisitions among the capital's intended

uses.

GoTo, which is trading at a valuation of $4.4 billion,

referred Reuters to its previous regulatory disclosures that

there has been no agreement with any party about a potential

transaction.

Indonesia's transport ministry declined to comment.

OPTIMISING OPERATIONS

GoTo is 73.90%-owned by foreign investors, including

SoftBank Group and Taobao China Holding, a unit of

China's Alibaba Group ( BABA ), with the rest owned by

Indonesian investors, according to its 2024 annual report.

SoftBank's SVF GT Subco (Singapore) Pte Ltd and Taobao are

GoTo's top two shareholders, holding 7.65% and 7.43% stakes,

respectively, the report showed.

When asked to comment on a potential deal involving GoTo and

Grab, Sufmi Dasco Ahmad, the deputy speaker of the Indonesian

parliament, told Reuters the government wants GoTo to be

majority-owned by Indonesians.

Dasco, who is also a senior member of Indonesia President

Prabowo Subianto's ruling party, did not detail how GoTo can be

majority-owned by Indonesians. He also did not comment on any

conditions the government has set for the potential merger.

Deputy Indonesian manpower minister Immanuel Ebenezer, whose

agency oversees employment, said he has no information on any

conditions set for a Grab-GoTo merger.

A merger would enable the two companies, which, according to

LSEG data, have been posting annual net losses since their IPOs,

to cut costs by optimising operations.

Grab, with a current market value of about $19 billion, is

currently worth about half the $40 billion when it merged with a

blank-check company to list on the Nasdaq in December 2021.

($1 = 16,295.0000 rupiah)