Grab Holdings is weighing a takeover of rival GoTo Group at a valuation of more than $7 billion, accelerating talks for a combination to end years of losses in Southeast Asia’s competitive internet market.

One scenario being discussed is an all-stock purchase valuing shares of Indonesia’s GoTo at more than 100 rupiah apiece, according to people familiar with the situation. That would represent a premium of about 20% over its current stock price level.

Discussions have intensified in recent weeks and the companies see 2025 as an opportune year for a deal, the people said. The firms — the two biggest ride-hailing providers in Southeast Asia — have held on-and-off talks for years, targeting a combination that would reduce costs and competitive pressure in the region of more than 650 million consumers.

Shares of Grab jumped about 7% in pre-market trading. Together, the companies’ market value approaches $25 billion, rivaling the capitalization of some of the biggest firms in Southeast Asia.

Singapore’s Grab, backed by Uber Technologies Inc., and GoTo, whose investors include Softbank Group Corp., have both made progress toward profitability following their stock-market debuts in recent years. But competition for users has kept prices in check and squeezed margins.

In the years past, hurdles for a merger have included disagreements between the parties as well as potential antitrust obstacles caused by the companies’ dominance in markets such as Indonesia and Singapore. And the current talks may not lead to a transaction at all, said the people, asking not to be identified as the matter is private.

A GoTo spokesperson declined to comment, while Grab representatives had no immediate comment when contacted by Bloomberg News. DealStreetAsia earlier reported the companies’ target of reaching a deal this year.

A merger could result in cost savings, as the companies would be able to reduce user subsidies and integrate their back-end systems, Citigroup analysts including Alicia Yap and Ferry Wong said in a note.

“They would also be able to reinvest into riders and merchants management to cross-sell financial services offering and increase advertising revenue,” the analysts said.

While discussing a combination, the companies each have struck smaller deals in a bid to improve their finances. Grab has bought a supermarket chain in Malaysia and a reservation app in Singapore, while GoTo a year ago agreed to relinquish control of its loss-making e-commerce arm to ByteDance Ltd.’s TikTok in a $1.5 billion deal.

Meanwhile, the companies’ growth has cooled dramatically from triple-digit rates in years past as customers in the region curb spending to cope with elevated inflation and interest rates. Demand is increasing at a slower pace as their customer base expands and consumers are less eager to hail a ride or get food delivered to their door in a challenging macroeconomic climate.