Amazon.com has agreed to purchase Dubai-based on-line retailer Souq.com, betting that e-commerce within the Middle East is poised to take off.
The US e-commerce big beat out Emaar Malls, which runs the world’s greatest procuring heart and had bid $800 million for Souq.com. Amazon and Souq.com didn’t disclose deal phrases and declined to remark.
Amazon has been stepping up its abroad enlargement. Having largely ceded China to Alibaba Group Holding, the Seattle firm is waging a struggle of attrition with Flipkart Online Services in India, the place it has pledged to spend $5 billion within the subsequent few years. The Middle East has lagged behind the remainder of the world in e-commerce, however on-line procuring is choosing up in such international locations as Bahrain, Qatar and the United Arab Emirates, the place most individuals personal cellphones.
“Using an acquisition to enter a geographic area is a brand new technique,” mentioned Edward Yruma, managing director of KeyBanc Capital Markets, in analysis word. “Amazon has constructed its enterprise in India from the bottom up over years and simply launched Amazon Prime in India final summer season.”
In Souq.com, Amazon is getting a effectively-established participant that claims to attracts 23 million on-line visits a month. The retailer, which employs over 3 000 individuals, sells over 400 000 merchandise, from televisions to perfumes – and even mentions that it is named the “Amazon of the Middle East”, in accordance with its web site.
Founded in 2005 as a part of Arab on-line providers supplier Maktoob, it was spun out following Yahoo! Inc.’s $164 million acquisition of Maktoob in 2009.
Souq.com was valued at $1 billion in its final funding spherical, individuals with data of the matter mentioned on the time. The retailer secured $275 million in February 2016 from traders together with Standard Chartered Private Equity, International Finance Corporation and Baillie Gifford. Souq.com’s traders additionally embrace hedge-fund agency Tiger Global Management and South African media firm Naspers.
The deal is one in every of Amazon’s largest acquisitions lately. In 2014 it purchased recreation streaming web site Twitch for $970 million. The US retail big started weighing a bid for Souq.com late final yr, a transfer first reported by Bloomberg. Having walked away from a deal earlier within the yr, Amazon restarted negotiations to purchase the corporate for as a lot as $650 million, individuals acquainted with the scenario mentioned on March 9.
“Amazon and Souq.com share the identical DNA — we’re each pushed by clients, invention and lengthy-time period pondering,” Amazon Senior Vice President Russ Grandinetti mentioned in a press release.
The deal is anticipated to shut this yr.
© 2017 Bloomberg