In a statement released to the press on Tuesday by Amazon.com (AMZN.O), the e-commerce magnate confirmed its acquisition of Souq.com.
Souq.com is the largest online retail platform in the Middle-East. The company was started as a collaborative effort between Syrian-born Ronaldo Mouchawar. The company was valued at one billion US dollars last year by CB Insights, after drawing more than two hundred million US dollars in investment in 2016 alone. Souq.com has sold over eight million products in over thirty categories in just the past year.
Amazon had already agreed to purchase Souq.com last week though the deal was not confirmed until this week. The reason for this is that Amazon had a competitor for the Middle-Eastern company, therefore, approving the sale took time.
Amazon beat local billionaire and real estate mogul Mohammed Alabaar to acquire Souq.com. Alabaar had put in his bid for his firm Emaar Malls (EMMA.DU). A source reported that though the Malls’ 800 million bid beat Amazon’s, Souq.com sold out to Amazon because selling to Emaar Malls would have ‘broken its deal of exclusivity with Amazon.’ Goldman Sachs, the company that brokered the agreement between Amazon and Souq.com said that the deal ‘was the biggest ever technological merger and acquisition that the Middle-East had ever seen.
Alabaar, known for his role in the development of the world’s tallest building which is situated in Dubai, was not put out, however. He says that he plans to start his e-commerce venture called ‘Noon’ to compete with Amazon’s Souq.com for the unexploited Middle-Eastern online retail market. This market was approximated to be worth twenty billion US dollars in 2016 and analysts from Standard Chartered Limited estimate that it will continue to grow at around thirty percent annually. Having even a small market share would allow Amazon and Malls to rake in revenue in the billions per year in future.
Everyone goes home happy
Amazon accelerates its entry into the Middle Eastern market with this deal, but what does Souq.com gain?
In a statement issued by Souq.com’s Mouchawar, the company declares that one of its goals when looking to sell was to be able to benefit the local sellers in the region. “With Amazon, we found a company with a track record for empowering traders on online platforms,” Mouchawar said. He added that Amazon would also help the company expand in various branches among them fast and convenient deliveries to its customers. Souq.com would also be able to utilize Amazon’s network and expertise in designing its platform to make it easier for customers to make their selections online.
Amazon and Souq.com are not the only ones to benefit from Tuesday’s acquisition. The government of the city-state of Dubai, which expressed support for the deal, stated that the purchase marked Dubai as a hub for growth in both the regional and global avenues. The Crown Prince of Dubai hopes that more ‘big business leading in their fields’ in the world will join in investing in the Middle East.
