Grab Holdings jumped 12.6% on Tuesday after a report that it's considering a takeover of rival GoTo Group (OTCPK:GTOFF) at a valuation of more than $7 billion. The ride-sharing provider was also upgraded to buy at HSBC.

Under a potential deal being discussed, Grab may offer all-stock, valuing Indonesia's GoTo at more than 100 rupiah each, according to a Bloomberg report on Tuesday, which cited people familiar with the matter. The bid would represent a ~20% premium to GoTo's current price.

The two biggest ride-hailing providers in Southeast Asia have had on-and-off talks for years, though the discussions have intensified recently, according to the report. The companies see this year as an opportune time to come to an agreement.

Separately, HSBC upgraded Grab (NASDAQ:GRAB) to buy from hold, writing that street estimates for the company have come down over the last few months and the valuation is more attractive now. The price target was lowered to $5.45 from $5.50.

"We continue to think Grab should be able to strengthen its leadership position in key categories (ride hailing and deliveries) due to its ability to continuously roll out innovative and affordable products," HSBC analyst Piyush Choudhary wrote in a note on Tuesday.