Amazon (AMZN) has agreed to purchase Souq.com, the largest e-commerce platform in the Middle East. No details have been released on the size of the deal, but a recent round of funding valued Souq at $1 billion.
According to one Baird analyst, the e-commerce platform may already be at the $10 billion per year mark. Souq offers Amazon the advantage of acquiring a strong local brand and helps Amazon gain a foothold in the market early on.
Amazon wasn’t the only company vying for Souq, according to Bloomberg. A weekend report showed that Emaar Malls offered $800 million despite Amazon being in exclusive negotiations with Souq.
Amazon (AMZN) in $650 Million Deal
A report from TechCrunch said the deal was valued at $650 million.
Amazon’s acquisition will be its first move into the Middle East market. Souq currently serves around 50 million consumers across the region. The company already has payment and fulfillment infrastructure in place as well as a marketplace with four million products.
“Joining the Amazon family will enable souq.com to continue growing while working with Amazon to bring even more products and offerings to customers worldwide,” said Souq in a statement.
Amazon will maintain the existing Souq.com business and has plans to bring on management and other teams.
“By becoming part of the Amazon family, we’ll be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon’s great track record of empowering sellers,” said Ronaldo Mouchawar, CEO and co-founder.
Since 2009, Souq has been the leader among e-commerce retailers in the Middle East. A growing number of consumers are now turning to their mobile devices and the Internet to purchase goods. The company’s biggest competitors include Namshi and Wadi, which raised $67 million last year.
Shares of Amazon (AMZN) were mostly flat in pre-market trade, with 5,7000 shares traded at between $846 and $848.
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