Amazon Snags Souq in Largest MENA Exit
Months of rumors circulating the Middle East e-commerce sector culminated in Amazon acquiring Souq.com for an estimated $650 million. Talks originally began in November 2016 when Bloomberg reported that Amazon considered acquiring the Dubai based e-commerce marketplace for a whopping $1 billion. Then in January, Amazon walked away from the deal with Souq, apparently due to a disagreement over valuation. That followed with speculations that Majid Al Futtaim Holding was considering acquiring Souq. Then the saga ended on March 28th 2017 when Amazon confirmed in a short statement the acquisition of Souq.com for an undisclosed amount, after successfully preventing a bid by Emaar Malls – which was reported to be in the range of $650 million. This marks the largest exit from the MENA region to date. As part of the deal, Amazon has also agreed to acquire Payfort, an online payment platform for e-commerce that has been Souq.com’s payment platform since its inception. Early in 2016, Souq closed a funding round of $275 million from Tiger Global and Naspers, as well as some strategic investors, including Standard Chartered Private Equity, IFC (a member of the World Bank Group), Baillie Gifford, and other techfocused financial institutions. That round increased Souq’s valuation to a $1 billion with a total of $425 million raised since it was founded in 2005. Considering all of that, a $650 million acquisition doesn’t look so alluring however, it is significant and will shake up the region’s growing e-commerce sector and the ecosystem’s development. The acquisition of Souq gives Amazon a head start in the region rather than building from the ground up. Buying Souq provides Amazon with an existing customer base, access to regional merchants and existing infrastructure. Souq currently sells over 2 million products in addition to a newly introduced global bookstore of 6 million books and an online grocery platform, introduced in November. Additionally, with Payfort, Amazon secures the payments infrastructure.