In February this year, news emerged about a potential merger involving ride-hailing giants Grab and Gojek, but little headway was reportedly being made, with Gojek flatly denying that any plans of such a nature was on the cards. Now, it seems that a union may be a possibility, with substantial progress having been made in discussions between the two companies, Bloomberg reports.

It is however not a foregone conclusion, because talks are still fluid and may not result in a transaction, sources familiar with the matter told the news organisation. Regulatory approval would also be needed for the deal to go through, and governments may have antitrust concerns about the unification of the region’s two largest players in the segment, the report added.

The sources revealed that both companies have narrowed their differences of opinion, pointing towards a positive outcome, although some aspects of the agreement were still being negotiated. These discussions are being carried out with the participation of SoftBank Group Corp’s Masayoshi Son, a major Grab investor.

An outline of how the combined entity would shape up was also ventured. According to the sources, Grab co-founder Anthony Tan would become the CEO of the unified business, while Gojek executives would run the new combined business in Indonesia under the Gojek brand, with both brands running separately for an extended period of time. Grab, Gojek and SoftBank all declined to comment on the matter.

Both companies have been competing fiercely for dominance and burning lots of cash while at it, and investors have been pushing for them to combine forces in order to reduce that spending and create one of the most powerful internet companies in the region.

That rivalry as well as personality clashes between the two companies’ leaders have resulted in negotiations being deadlocked in the past, but the emergence of Singapore-based Sea Group – which owns the Shopee e-commerce platform – as a leading player in e-commerce and digital payments has helped drive talks, the sources said. The latter’s ShopeePay e-wallet is gaining market share at a fast clip to challenge market leaders GoPay and Grab-backed Ovo in Indonesia.

Separately, Reuters reports that Grab’s Tan has told employees via an internal note that the company is well placed to make acquisitions, having become profitable before overheads and with business having fully recovered to pre-pandemic levels.

“There is speculation again about a Gojek deal. Our business momentum is good, and as with any market consolidation rumours, we are the ones in a position to acquire,” Tan said in the note, which was sighted by the news agency. He however did not provide any specific information about a potential deal with Gojek. “There will always be rumours and gossip. Don’t let those distract us,” he said.