28/3/17: Amazon has confirmed its acquisition of Souq.com, press release details here.
28/3/17: It seems that the Souq might announce the Amazon bid details later on today (Tuesday) according to Reuters.
23/03/2017: Updated with dealings process and value of the acquisition.
Global e-commerce giant Amazon and Middle-East based Souq.com have been playing a game of chicken for the past few months when it came to talks over a potential acquisition by the former off the latter. According to The National, a full acquisition of Souq.com by Amazon has now been agreed.
Talks of a potential acquisition first started four months ago, after the Middle East-based online retailer appointed Goldman Sachs to find potential investors. Initially, Souq.com was planning to divest itself of a 30% stake in the company. Amazon swept in, not for the 30% stake but for the whole company. While talks were held behind closed doors, the number being floated around was a $1 billion acquisition. Ultimately, talks reportedly failed around two months ago after both Amazon and FlipKart Online (an Indian based online retailer) walked away.
However, according to The National, those talks are back on and the total acquisition could already be agreed upon. According to the Financial Times, Amazon will be paying between $650 and $750 million for the buyout. If true, this would pave the way for Amazon to enter the region, potentially bringing with it a slew of its services. Souq.com itself has a huge base of consumers. In 2015, during its White Friday sale, it sold over 600,000 items, a number that was doubled in 2016. Currently, Souq.com offers 8.4 million products on its website. Amazon boasts 40 million.
Meanwhile, Noon.com, another online retailer, missed its initial launch date. Backed by Emaar Properties Chairman Mohamed Alabbar, it promises to grow online sales in the region from 2 per cent of the total market (US$3 billion), to 15 per cent (US$70 billion) within a decade. Apparently, Mr Alabbar also placed a bid for Souq.com, but it was rejected as too low, say people aware of the matter.
Source: The National, Financial Times, Reuters.
