Amazon in talks to acquire Souq.com for US$1 bn

The United States conglomerate Amazon is in negotiations to acquire the Dubai-based online retailer Souq.com for a reported US$1 billion.

Sources familiar with the Dubai company’s dealings indicated in September that it contracted Goldman Sachs to find a buyer for 30 percent of Souq’s shares, while the principal existing investors were also considering whether to sell their stakes in the company, according to Bloomberg.

More than 1.5 million products are available for purchase on Souq.com – a figure that includes the company’s own products in addition to those sourced from third-party sellers – with the website claiming that it attracts 45 million unique visitors to its pages each month.

The company secured $275 million in February from New York-based Tiger Global Management and South Africa’s Naspers Ltd, after having raised $150 in venture capital in June 2015.

Souq.com currently operates in the UAE, Saudi Arabia, Egypt, Kuwait, Bahrain, Oman and Qatar. The company has reported that it expects sales to grow by a rate of 60-90 percent in these national markets, while the Emirati state-owned National newspaper has projected that the whole of the Middle East’s electronic commerce market will post in $20 billion in sales this year.

Amazon’s takeover of the company was rumored as early as two yeas ago. However, the negotiations did not culminate in an agreement.

Syrian national Ronaldo Mouchawar co-founded Souq.com in 2005 as an auction platform connected to the service platform Maktoob, which was acquired by Yahoo! in 2009 for US$164 million. However, the websites operating under Maktoob, which included Souq.com, were not transferred to Yahoo! in the deal but were aggregated under the newly formed Jabbar Group holding company.

The Middle East has seen several other notable acquisitions in recent years. Cookpad, a Japanese recipe platform acquired the Lebanese recipe website Shahiya.com in November, 2014 for $13.5 million.

The German electronic commerce Rocket Internet company acquired the Kuwaiti food delivery service Talabat in February, 2015 for $170 million and the Egyptian online food ordering service Otlob in October, 2015. The details of the Otlob deal were not announced, but the regional business website Wamda, which focuses on entrepreneurship news, put the deal at $12 million.

A purchasing group that included the MENA Long-Term Value Fund Enterprise Fund, Helios Investment Partners and the Egyptian-American Enterprise Fund (EAEF) acquired the Egyptian electronic payment portal Fawry in November, 2015 for $100 million.

In March, Quora, a question-and-answer website, acquired the online community platform Parlio, which was co-founded by Wael Ghoneim, an activist, entrepreneur and former Google employee. The details of the deal were not disclosed.