Grab Holdings (GRAB, Financials) is advancing discussions to acquire Indonesia-based GoTo Group, marking a significant move in Southeast Asia's ride-hailing and food delivery industry, according to a Bloomberg report.

After Grab scrutinizing GoTo's finances, contracts, and operations, the continuous but sporadic debates now enter the due diligence stage. Though earlier conversations failed to produce a settlement, the most recent development points to a fresh drive toward possible consolidation.Combining Grab and GoTo would provide a major participant in the Southeast Asian industry, valued at around $28 billion in 2024 and expected to reach $31 billion by 2025. If the agreement is finalized, the result might be a stronger merged company able to challenge more successfully other regional and international competitors. But because of worries about market dominance and how it might affect competition, antitrust authorities are likely to examine the possible merger.Recent years have presented both businesses with major operational and financial difficulties. Although Grab failed to exceed analyst forecasts, its fourth-quarter revenue showed a 15% year-over-year rise, hitting $764 million. For the quarter the corporation had a net income of $11 million. GoTo, which has been striving for profitability, said in 2024 its first-ever year profit with an adjusted EBITDA of386 billion rupiah ($23.5 million). Notwithstanding these gains, both companies run in a difficult economic climate characterized by inflation and high interest rates, which have slowed down consumer purchasing all throughout the area.Apart from grouping two of the biggest ride-hailing and delivery companies in Southeast Asia, the possible merger would change the competitive environment of the sector. In 2018, Uber (UBER, Financials) left the area, moving its activities to Grab in return for an ownership investment. Since then, Grab and GoTo have sought to grow their ecosystems by including banking, e-commerce, and logistical tools into their platforms.Operating difficulties include fierce rivalry and the need of cost-cutting initiatives have driven both businesses to change their strategies. Their approaches to attain sustained profitability have included workforce cuts, restructure initiatives, and changes in corporate goals.There is no certainty that a final agreement will be achieved; negotiations are still under progress. GoTo's and Grab's representatives refused to comment on the subject. Should the merger go forward, it would most certainly be subject to regulatory clearance and further financial due diligence before completion.