E-commerce and cloud computing group Amazon has agreed to acquire United Arab Emirates-based online marketplace Souq.com for $650m, giving media and e-commerce firm Naspers an exit, the Financial Times reported yesterday.
Founded in 2005, Souq operates the largest online marketplace in the Middle East by customer size, linking to about 75,000 businesses and offering some 2 million consumer items for sale.
Amazon will get a foothold in the region through the purchase, giving it an ideal base in an area of the world in which it has never operated as well as Souq’s online payment and fulfilment subsidiary, Payfort.
Another factor was the emergence of Noon.com, an e-commerce player that is yet to launch, but which has secured $1bn in funding from the Saudi Arabia government’s Public Investment Fund and entrepreneur Mohamed Alabbar, who is also an investor in local logistics company Aramex.
The deal was sealed this week, according to two people familiar with the transaction, but the purchase price, cited as between $650m and $750m by the FT before TechCrunch confirmed its size, is a substantial reduction from the $1bn valuation at which it last raised funding in February 2016.
Amazon had entered talks with Souq in late 2016 to buy a 30% stake at a $1bn valuation only to reportedly walk away in January this year due to disagreements about the price.
Souq, which had also explored deals with e-commerce companies Flipkart and eBay and retail group Majid Al Futtaim, had discussed a sale with Amazon for most of 2017 so far, with the potential price hovering between $500m and $700m, a source told TechCrunch.
The company had raised about $425m, having secured $272m in the 2016 round. Naspers led that round, which included Tiger Global Management, Standard Chartered Private Equity, Baillie Gifford and International Finance Corporation, the private investment arm of the World Bank.
Naspers has joined Tiger Global and internet firm Jabbar Internet Group for a $40m round Souq closed in 2012, before investing another $75m in the company two years later.
– Image courtesy of Souk.com