Nine months later, Amazon buys Souq
23 Mar 2017
After negotiating for nine months (with an interruption of a few weeks earlier this year), Amazon agreed in principle to buy Souq.com, the Dubai-based online shopping market, reported Reuters.
Financial Times (FT) reported (here) the deal had been signed earlier this week. The FT report quoted “two sources familiar with the transaction”, who said Amazon had agreed to pay somewhere between $650 million U.S. and $750 million U.S. for the entire Souq.com.
Goldman Sachs acted as adviser of Souq.com, and helped to arrange the deal, which gives Amazon a presence in the region without having to deal with regulatory approvals and hurdles.
The transaction concludes a nine-month rollercoaster ride for Tiger Global Management and South Africa’s Naspers to this exit.
Reportedly, the sellers initially envisioned selling 30 percent of Souq, which they valued at $1 billion U.S., to make it the region’s first unicorn. As the negotiations dragged on, the valuation (and price) slipped, and the part-sale turned into an outright sale, according to those familiar with the deal.
The deal is large – even for Amazon, a company that has preferred building its own operations to making acquisitions. Its largest deal has been for the live-stream gaming network Twitch, which it acquired for $970 million U.S. in cash in 2014.
Souq, co-founded in 2005 by Syrian entrepreneur Ronaldo Mouchawar, is one of the Middle East’s most recognized online brands, delivering to the six Gulf countries and Egypt. It lists more than 1.5 million (new) products ranging from electronics, to house wares, exercise gear and health and beauty products.
One of the rival bidders was tycoon Mohamed Alabbar, chairman of Dubai real estate company Emaar. Alabbar, whose bid was rejected as too low, plans to launch Noon, an e-commerce start-up with financial backing from Saudi Arabia’s Public Investment Fund, controlled by the kingdom’s powerful deputy crown prince, Mohammad bin Salman.