One of the world’s biggest online stores and hosting service provider, Amazon, has confirmed acquisition of Souq, which is the biggest e-commerce chain in the Middle East.
Amazon did not reveal the price tag for the deal but rumors and early reports estimate that the company paid between $650 million to $750 million for the acquisition.
With this deal, Amazon will be hoping to spread its wings in the Middle East, allowing it to dominate a market with high purchasing power.
Emaar Also Bid for Souq
Amazon wasn’t the only one looking to acquire Souq. In fact, Emaar Malls also lodged an $800 million bid for the e-store.
BECO Capital’s CEO Dany Farha seems to think that Emaar acquiring Souq could be a good deal for them. He said that if Souq were to be bought out by a traditional operator like Emaar Malls and gave Souq complete autonomy over strategy, operations etc, letting the techie side of the executive team currently in place to truly shine and flourish. According to him, Emaar would:
..only act as a helping hand to increase supply of product, strengthen supply chain, reinforce the branding and marketing offline in stores across the region, and build out an omni-channel strategy for retailers across the region, whilst supporting it with funding and increasing its capital efficiency, then this would be a fantastic outcome. Amazon has many of these attributes, which also makes it an optimal buyer.
A Win-Win Scenario for Souq
The deal would have been a win no matter which way it went. Dash Ventures’ Managing Director, Omar J. Sati seems to think the same.
Clearly, the higher bid from Emaar is better for them at first glance, but the Amazon deal is still unclear. Will they keep management? Will there be sweeteners such as earn-outs? Don’t forget, the biggest advantage Amazon has is the ability to offer share swaps and share incentives in Amazon. In summary, I think an Emaar deal would be a short-term win for the Souq team, but an Amazon deal would be a more valuable win in the long-term. In either case, it’s a win.
PayFort, a fintech company owned by Souq will also be acquired by Amazon as part of the deal. PayFort Managing Director Omar Soudodi said that,
Today as part of Souq Group Inc. we are pleased to officially announce that PayFort International Inc. and its subsidiaries will be acquired by Amazon, through Amazon’s acquisition of the Souq Group.We are excited about the future opportunities that are ahead of us as part of Amazon.