GOTO – Potentially game-changing acquisition
GOTO finally announced its cooperation with Tiktok, citing the combination of the enlarged Tokopedia entity where GOTO will retain a 24.99% non-dilutive stake even in the event of future funding in Tokopedia, while Tiktok is reported to have committed a USD1.5 bn investment in Tokopedia, with a USD500 mn initial cash injection and effectively taking a 75.01% controlling stake in the company.
Post-transaction, Tokopedia will be de-consolidated from GOTO, along with the goodwill from 2021’s acquisition that will be written off. Furthermore, GOTO will continue to book revenue while limiting future potential loss. More details are to be announced by the company.
We believe this transaction may result in the birth of a future e-commerce giant in the industry. Considering TTS’s growth trajectory (Dec 22 monthly GMV at USD390 mn, grew to Sept 23’s USD600 mn) and its balance sheet support from the parent entity. We also expect a short-term intensifying competition in the industry as Tiktok will try to regain its lost market share, especially from Shopee, during the last 3 months’ ban.
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