It’s official. After months of will they? won’t they? and a last-minute challenger bid, Amazon has closed an acquisition deal to buy 100 percent Dubai-based online retailer Souq.com. The deal is expected to close later this year.
While the financial details have yet to be disclosed, Reuters said Goldman Sachs, which oversaw and advised the deal, called Amazon’s acquisition of Souq.com the “the biggest-ever technology M&A transaction in the Arab world.”
While earlier reports indicated that Amazon was looking to pay somewhere around $1 billion to gain access to the high-growth eCommerce market in the United Arab Emirates (UAE), Egypt and Saudi Arabia, later insight pegged Amazon’s offer at $650 million.
Amazon’s offer for Souq.com had recently been challenged by an alleged $800 million bid from Emaar Malls, the retail division of Dubai’s largest publicly traded property developer — but it looks like fortune favored Amazon in this case.
Founded in 2005, Souq.com became one of the highest-valued internet companies in the Middle East after a $275 million round of funding in March of last year. Amazon had been in on-again, off-again talks with the company since November of last year.
Currently, Souq reportedly stocks 8.5 million items on its website — ranging from consumer electronics to household products and apparel. The online retailer generates some 50 million monthly visits from its customer base in seven countries, including Saudi Arabia, Kuwait and Egypt.
Amazon now owns a major share of the online retail market in the Middle East, which is growing rapidly thanks to a young and tech-savvy population. Kuwait, Saudi Arabia and the UAE, for example, are among the top seven countries worldwide in terms of smartphone penetration.
While most shopping occurs in physical stores in the region, the ratios look to shift once Amazon enters the picture. Once Amazon takes over, Middle East consumers will be able to Amazon products through Souq.com; likewise, Middle East merchants will have access to Amazon’s eCommerce network.