Amazon’s Middle-eastern expansion plans might have to face some serious competition. According to multiple reports, Emaar Malls has submitted a $800 million offer for acquiring online retailer Souq.com. This offer comes as a challenge to Amazon’s recent $650 million bid for 100% of their operations, tell sources aware of the development to Bloomberg.
In a statement confirming the bid, Ahmad Thani Al Matroushi, vice chairman of Emaar Malls said,
Emaar Malls has submitted a bid of US$800 million for Souq.com in line with the strategy to align e-commerce with physical shopping.
Further, sources continue to add that Emaar Malls’ offer includes a convertible deposit of $500 million whereas Amazon has included an exclusivity clause along with their acquisition offer. Souq.com has not reached an agreement with either of the two bidders because these offers still require approval from the company’s shareholders.
This is a significant development in Souq.com’s acquisition process because speculations of the e-tailer looking for for a potential sale has been making rounds of the interwebs for weeks. The company had hired Goldman Sachs to find buyers for a stake last year, but it decided to transfer complete ownership when offers started pouring in.
Souq.com had been looking to court deals at over a $1 billion valuation but it saw a massive drop to $650 million with Amazon’s offer. And now it is inching closer to the asking amount as Emaar Malls has stepped in to intervene Amazon’s global expansion plans. It will prove as an important test for Dubai’s e-commerce giant, who has to take a decision in the best interest of its shareholders. This surely will create intensive pressure on Amazon to increase its bidding offer, which could probably be Emaar Malls’ objective.
Emaar Malls, the retail division of Dubai’s largest publicly-listed property developer Emaar Properties. The company is spearheaded by billionaire Mohammed Alabbar, who has recently been diverting his attention to investments in technology startups. He has recently set up a $1 billion investment fund, in collaboration with regional investors, for the said cause. These investors include Saudi Arabia’s Public Investment Fund and others. It has already led its first investment in regional logistics firm Aramex last year.
The property developer also raised the said capital to create its own Middle-eastern e-commerce platform Noon, which was expected to debut with over 20 million products in January. But it has missed the said date and there is no information on its scheduled launch at the moment.
For those unaware, Souq.com was founded in 2005 by Ronaldo Mouchawar and is now the largest online retailer in the Arab world. The platform offers over 1.5 million products across categories such as consumer electronics, fashion products, and household goods. Operating both an online retail store and a marketplace, it is often referred to as the Amazon of the Middle East. It was launched as an online auction website but pivoted to the said model in 2011.