US-listed ride-hailing and food delivery firm Grab is looking to strike a deal to take over smaller Indonesian rival GoTo in the second quarter, two sources with knowledge of the matter said, Reuters reported on Wednesday,

Singapore-headquartered Grab has hired advisors to work on the proposed deal, the two sources added. The deal is subject to terms such as financing, which Grab is in discussion with banks, one of the sources added.

Both Grab and GoTo declined to comment, according to the report.

Grab Co-Founder and CEO Anthony Tan declined to comment to TNGlobal‘s query on Grab-GoTo merger news when asked at GrabX event in Singapore last month.

Uber-backed Grab is looking to buy GoTo’s businesses at around $7 billion, according to a separate source with knowledge of the matter. Jakarta-listed GoTo’s shares have climbed 20 percent year-to-date, giving it a market value of around $5.8 billion, LSEG data showed.

GoTo will be selling off its international unit in Singapore to Grab, two separate sources familiar with the matter said. In Indonesia, GoTo will sell its entire operations except its finance arm to Grab, one of the two sources added.

Grab started as a ride-hailing services and now has grown into a so-called super app offering deliveries, financial services, among others.

GoTo, whose investors include SoftBank and Taobao China Holding, described itself as Indonesia’s largest digital ecosystem that provides e-commerce services and banking services. Both Grab and GoTo are backed by Softbank.

A merger between Grab and GoTo would create a giant in the ride-hailing industry in Southeast Asia dominating around 85 percent of the $8 billion market, according to data analytics company Euromonitor International.

“The combined entity would hold a market share of over 91 percent in Indonesia, and almost 90 percent in Singapore,” said David Zhang, Euromonitor International’s insights manager of payments and lending in Asia.

“Markets especially in Indonesia and Singapore will impose strict scrutiny,” he said, adding that the merger will likely be blocked by regulators in key markets in Southeast Asia.

Last month, Maybank Investment Bank’s research house said that if Grab acquires Gojek, it sees synergy net present value (NPV) of $2.4 billion, leading to 10 percent NPV accretion for Grab while balance sheet cash will still be a strong $3.2 billion.

According to the research house, a Grab-Gojek merger and acquisition (M&A) is a likely scenario, with GoTo’s fintech and e-commerce businesses being excluded from the deal.

While Grab+Gojek will command 80 percent to 90 percent market share in Indonesia, it still sees the merger potentially going through as the market share of the mergedco as a percent of total surface transport will still be highly manageable at 23 percent.

Maybank also foresee Grab+Gojek merger synergies of $100 million to $200 million per year.

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