Legal, GoTo and TikTok Officially Combine E-commerce Business

One day before Harbolnas 12.12, PT GoTo Gojek Tokopedia Tbk (IDX: GOTO) and TikTok are finally official announced a strategic partnership they are certain to bring back the TikTok Shop service. This partnership is said to strengthen the growth of the digital economy, especially MSMEs in Indonesia.

In this agreement, the Tokopedia and TikTok Shop Indonesia businesses will join and operate under the auspices of PT Tokopedia. This transaction is targeted completed in the first quarter of 2024. Meanwhile, in this transaction, Goldman Sachs acted as financial advisor to the GoTo Group.

The following is a summary of the main points of GoTo and TikTok's strategic partnership:

• TikTok will invested $1,5 billion (around Rp. 23,4 trillion) as a long-term commitment to support PT Tokopedia's operations, without any dilution of GoTo's ownership in Tokopedia.
• In the disclosure of information on the IDX, a share acquisition agreement was agreed on December 10, 2023 regarding TikTok's investment in Tokopedia worth $840 million (around Rp. 13,8 trillion). This investment will be used for take part and pay in full for the new shares published by Tokopedia.
• When the investment plan is completed, TikTok will control share ownership of up to 75,01% over Tokopedia, while GoTo maintains share ownership of 24,99% in Tokopedia.
• In-shopping service features The TikTok application in Indonesia will be operated and managed by PT Tokopedia.
• The business merger of Tokopedia and TikTok Shop is a strategy for brings financial benefits for the parent company, including reaching a wider market for other subsidiaries, namely GoTo Financial and Gojek (on-demand).

"This agreement is in line with the GoTo Group's steps to strengthen its financial position and expand market coverage (total addressable market). "GoTo will also receive a revenue stream from Tokopedia in line with the company's scale and growth," said GoTo's official statement received on Monday (11/12).

Pilot strategic partnerships

As an initial stage, this strategic partnership was initiated through a Buy Local trial program starting on December 12 2023 to coincide with National Online Shopping Day (Harbolnas). This trial period was carried out with consultation and supervision from the relevant ministries and institutions.

Through the merger of the two businesses, more than 90% merchant which is an MSME, it is said that it will receive support from a combination of various TikTok, Tokopedia and GoTo Group programs, including:

1. Promotion of Indonesian products and upstreaming of MSMEs which can increase the capacity and competence of Indonesian MSMEs through comprehensive programs from upstream (production stage) to downstream.
2. Marketing support, branding, and sustainable business practices for traders, as well as supporting local businesses to promote their products on international markets.
3. Open a digital talent development center and ensure a market place that enables healthy business competition.

To ensure the sustainability of PT Tokopedia's steps in encouraging the development of the national digital economy, a committee will be formed to facilitate the transition and integration chaired by Patrick Walujo, with support from representatives of PT Tokopedia and TikTok.

"In the future, TikTok, Tokopedia and the GoTo Group are committed to providing wider benefits for MSMEs in Indonesia by utilizing the platform E-commerce, and drive the creation of millions of new jobs in the next five years."