After months of speculation, Amazon has confirmed in a press release on Tuesday that it has finally reached an agreement with Middle Eastern e-commerce company Souq.com for an acquisition deal.
Prior to the closing of the agreement for acquisition, Emaar Malls challenged Amazon’s takeover bid with a price offer of $800 million.
From previous reports, it was speculated that Amazon’s initial bid was at $600 million but later details about the valuation of the deal were no longer disclosed, although both companies said that the deal is expected to close in 2017.
Many speculate that Souq went with Amazon due to the similarity of the two companies in terms of operations, while Emaar Malls wanted to acquire the Middle Eastern company in order to expand business in an online platform.
“We are guided by many of the same principles as Amazon, and this acquisition is a critical next step in growing our e-commerce presence on behalf of customers across the region. By becoming part of the Amazon family, we’ll be able to vastly expand our delivery capabilities and customer selection much faster,” said Souq CEO and Co-Founder Ronaldo Mouchawar.
Amazon’s timely acquisition of the Dubai-based e-commerce site comes as the online shopping industry in the region is just starting to grow. According to analysts at Standard Chartered, the e-commerce in Middle East is constantly growing by at least 30% every year, which give wider untapped market for Amazon to add to their target expansion.
On Souq’s last funding round, the company received a total valuation of $1 billion last April 2015. Souq currently is the largest online shopping company in Dubai area, catering more than 8.54 million kinds of products across 31 categories ranging from household goods, consumer electronics and gadgets, fashion, health and beauty.
The merger of two e-commerce giant was greatly valued and appreciated by both companies, with Amazon Senior Vice President Russ Grandinetti stating that, “Amazon and Souq.com share the same DNA – we’re both driven by customers, invention, and long-term thinking. We’re looking forward to both learning from and supporting them with Amazon technology and global resources.”
Meanwhile, Amazon’s stock (NASDAQ: AMZN) closed 0.14% higher last trading session on Monday to $846.82 per share and is up by 0.06% to $847.35 per share in pre-market trading.
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