Indonesia's two most valuable start-ups, ride-hailing giant Gojek and e-commerce provider Tokopedia, are finalising terms for their merger and aiming to reach an agreement as early as this month, according to people familiar with the matter.
The two companies are discussing a variety of scenarios, with the ultimate goal of listing the combined entity in both Jakarta and the United States, said those people, asking not to be identified because the negotiations are private.
The target valuation in the public markets is between US$35 billion (S$46.4 billion) and US$40 billion, one of those people said.
Representatives of Gojek and Tokopedia declined to comment.
The two start-ups plan to create an Indonesian Internet powerhouse at the leading edge of businesses ranging from ride-hailing and digital payments to online shopping and delivery. Bloomberg News first reported their merger talks last month.
The latest terms under discussion call for Gojek shareholders to own about 60 per cent of the combined entity while Tokopedia's investors hold 40 per cent, said the people. Regardless of the ratio, both companies are approaching the transaction as a merger of equals, they said.
One scenario being discussed is to combine the two companies before concurrently listing them in Indonesia and the US, one of the people said. Another scenario is to list Tokopedia in Jakarta first, then merge with Gojek before a listing of the combined entity in the US.
The companies have yet to decide whether to list in the US via a traditional initial public offering (IPO) or a special purpose acquisition company.
The talks are ongoing and it is possible that they will take longer or fail to lead to a final agreement.
Gojek had been in discussions with ride-hailing rival Grab Holdings about a possible merger, but those talks dragged on and ultimately collapsed. Among other issues, that deal would likely have faced regulatory opposition as it would combine the two major providers of on-demand rides and delivery services in several South-east Asian markets.
SoftBank Group founder Masayoshi Son - the biggest outside shareholder in Grab - had originally encouraged Grab chief executive Anthony Tan to work out a deal with Gojek. But Mr Son has since shifted his support to a Gojek-Tokopedia alliance.
The two Indonesian tech pioneers have common investors, including Google, Singapore's Temasek and Sequoia Capital India. Their founders have also been friends since their inception more than 10 years ago.
If the combined Gojek-Tokopedia proceeds with an IPO, it would give global investors another opportunity to bet on one of the world's fastest-growing Internet economies. Shares of Singapore's Sea - the only major South-east Asian Internet firm listed in the US - climbed almost 400 per cent last year, boosted by the growing popularity of its mobile gaming and online shopping platform.