Grab announced plans for a $1.25 billion sale of bonds convertible into stock, the biggest of its kind among Asian companies this year, fueling speculation it’s bulking up its warchest to take over rival Southeast Asian delivery-and-transport provider GoTo Group.

Grab shares of the company fell 5% in Tuesday trading.

GoTo shares rose 8.2%, the most in two months, in Jakarta Tuesday after Singapore-based Grab, whose app is ubiquitous in Southeast Asia for ride hailing and food delivery, said it will issue convertible bonds that mature in June 2030, partly to fund potential acquisitions.

Though Grab issued a separate statement on Monday saying it wasn’t currently in talks to buy GoTo, the bond sale sparked optimism about the prospects of combining the two dominant ride-hailing and food-delivery companies in the region. The pair have held on-and-off talks for years but a combination never materialized, partly because of antitrust concerns likely to arise from such a merger.

“There is a growing likelihood of a Grab-GoTo deal,” said Nirgunan Tiruchelvam, an analyst at Aletheia Capital. “Grab seems to be lining up the financing for it.”

The securities will carry a coupon of zero to 0.5% a year, payable semiannually, and a conversion premium of about 35% to 40% to the stock’s closing price on Tuesday, according to terms of the deal seen by Bloomberg News.

Grab and GoTo representatives declined to comment beyond previous company statements.

Aside from possible acquisitions, Grab said it plans some share buybacks, which could facilitate initial hedges by investors in the deal, terms of the deal showed. The company had $274 million remaining under its share-repurchase program as of the end of March. The bonds will be redeemable, under certain conditions, from mid-2028.

Grab joins the flurry of sales of bonds that can be swapped into stock by Asian companies this year. That’s particularly been the case with Chinese firms as issuers from Baidu Inc. to Ping An Insurance Group Co. of China announced sizeable deals in recent months.

Grab’s offering is the largest Asian convertible-bond deal denominated in US dollars since Ping An’s $3.5 billion deal in July 2024, and the biggest by a non-Chinese company since Korean chipmaker SK Hynix Inc.’s $1.7 billion issuance in 2023. Ping An last week also issued convertible bonds worth $1.5 billion, denominated in Hong Kong dollars.

“This deal might appeal to convertible-bond traders, but it raises more questions than answers for long-term investors,” said Mohit Mirpuri, a fund manager at SGMC Capital Pte. “Unless there’s a strategic acquisition in play, it’s hard to justify adding to the cost of capital.”

Morgan Stanley, HSBC Holdings Plc and JPMorgan Chase & Co. are joint global coordinators of the deal.