Tech giant buys after $800m counteroffer

Amazon expands global reach

DUBAI: A truck is parked at the entrance of the warehouse on Monday. – AP

DUBAI: Tech giant Amazon expanded its global reach yesterday with the announcement of a deal to buy Dubai-based, the Middle East’s largest online retailer. The agreement, the financial details of which were not disclosed, brings Amazon into a fast-growing market as it continues to invest in its core retail network despite expanding into a wide range of services.

It appears competition was fierce to acquire, with the Amazon deal announced just a day after Dubai-based Emaar Malls confirmed offering $800 million to acquire the site. Amazon had walked away from talks with earlier this year, but it reportedly came back with an offer of $650 million. Founded in 2005 as an auction site, has evolved into a retailer and a marketplace for third-party sellers.
In a joint statement announcing the agreement, the two companies said the deal would be finalized this year “subject to closing conditions”. chief executive and co-founder Ronaldo Mouchawar called the agreement “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, as well as continue Amazon’s great track record of empowering sellers,” he said in the statement.
Amazon senior vice president Russ Grandinetti said the deal made sense as both companies “share the same DNA”. “We’re both driven by customers, invention and long-term thinking,” he said. “We’re looking forward to both learning from and supporting them with Amazon technology and global resources.” won a major vote of confidence last year and emerged as the highest-valued internet company in the region when it secured $275 million in funding from international investors to support its growth. At the time, Mouchawar said the e-commerce market in the Middle East was “growing very fast” and expected to reach $20 billion in 2016.

Known for its huge online retail operations, Amazon has been expanding into areas including cloud computing and streaming video where it is trying to rival Netflix. But online shopping remains at its core, with its retail operations taking in $26 billion in North America and $14 billion in the rest of the world in the last quarter of 2016.

Samih Toukan, the head of Jabbar Internet Group, an early investor in Souq, hailed the deal on Twitter, writing: “History is made”. He described the acquisition as the “biggest regional tech deal” since Yahoo! in 2009 purchased Maktoob, the first provider of Arabic email services. Mouchawar launched Souq from within Maktoob, which he joined after he landed in the United Arab Emirates in 2000. Born in Syria, Mouchawar had studied engineering and worked for several tech companies in the United States.

“This is a milestone for the online shopping space in the region,” he said in a later statement to staff posted on’s website. “Over time, I’m excited for what this acquisition will mean for every customer across the region,” he added. In an interview with Al-Arabiya news channel, Mouchawar said he would remain as the chief executive of, and that the company would keep its workforce. attracts over 45 million visits per month. But the Middle East continues to have a “significant untapped e-commerce potential”, according to a report last year by consultancy McKinsey, which put the region’s e-commerce at around one percent of total retail. In buying, Amazon will leapfrog into the crucial Mideast markets of Egypt, the United Arab Emirates and Saudi Arabia, where the Dubai-based retailer already has local operations. As a private company, hasn’t had to file public earning reports, though the website last year raised more than $275 million in a round of financing that the company said would help fuel its future growth.’s status as a free-zone firm also means Amazon will be able to run a 100-percent foreign-owned operation. Amazon’s entry into the UAE comes after Apple Inc. opened its first stores in the Arab world in Dubai and the UAE capital of Abu Dhabi in Oct 2015. The website’s major investors have included Tiger Global Management LLC and South Africa-based Naspers Ltd.

Rumors about Amazon’s interest in have circulated for months. In November, Emaar Chairman Mohamed Alabbar reportedly met Amazon CEO Jeff Bezos at the state-backed firm’s cavernous Dubai Mall, home to a massive aquarium and in the shadow of the Burj Khalifa, the world’s tallest building it built. On Monday, Emaar Malls PJSC made public its $800-million bid for in a filing on the Dubai Financial Market. The short filing, signed by Emaar Malls vice chairman Ahmad Thani Al-Matrooshi, said the bid was made “in line with the strategy to align e-commerce with physical shopping”.

Last year, Alabbar received a $1 billion investment in a forthcoming e-commerce venture from the Saudi government’s Public Investment Fund, the same sovereign wealth fund that invested $3.5 billion in the ride-hailing app Uber. That project, called, has yet to begin operations. Alabbar also holds stakes in the delivery company Aramex, which could prove useful for his online retailer.

Dubai, the commercial capital of the United Arab Emirates, home to the long-haul carrier Emirates and the world’s busiest international airport, also has luxury malls that even include an indoor ski slope. Its summer heat of over 50 degrees Celsius makes malls a major attraction for both shopping and leisure time in the city. While Uber and other online services firms work in Dubai, online retail shopping has yet to truly take off like it has in Western countries. Amazon’s entry into the market likely will change that. – Agencies

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