China’s TikTok will invest $1.5 billion to become the controlling shareholder of an e-commerce unit of Indonesia’s GoTo Gojek Tokopedia, as it seeks to restart its online shopping business suspended by regulators in Southeast Asia’s largest economy.
Indonesia has banned online shopping on social media platforms, forcing TikTok to close its e-commerce service TikTok Shop. The move aims to challenge fast-growing online sellers like Shein and PDD Holdings’ Temu.
Shares in GoTo, whose business includes ride-hailing, delivery, and financial services, tumbled 8.3% after the announcement, as some investors took profit from the stock’s recent rally on expectations of a deal with TikTok.
TikTok will buy 75.01% of GoTo’s Tokopedia, Indonesia’s largest e-commerce platform, for $840 million and inject TikTok Shop’s Indonesia business into the enlarged entity. The transaction will be concluded by the first quarter of 2024, and Tokopedia will receive a $1 billion promissory note from TikTok.
The business activities of the e-commerce platform Tokopedia and TikTok Shop in Indonesia will be merged under the PT Tokopedia platform, in which TikTok will hold a controlling stake.
Shopping features in the TikTok app in Indonesia will be operated and maintained by PT Tokopedia.
For GoTo – Indonesia’s largest internet company – the deal with TikTok could be risky as it would help TikTok continue operating in the country, but it also gives GoTo a global social media partner. Strong demand in a deal could boost procurement and payment volumes for both companies.
The e-commerce industry in Indonesia is expected to grow to $160 billion by 2030.
