Amazon has agreed to buy the Middle East-based e-commerce platform Souq (often referred to as the Amazon of the Middle East). The U.S. firm was able to offset the last-minute bid by Dubai billionaire Mohamed Alabbar’s Emaar Malls to acquire the region’s largest online retailer, reports Reuters. The acquisition is expected to close this year.Amazon Souq

Financial terms kept secret

The amount of the deal hasn’t been disclosed, but according to the BBC, Emaar Malls made an offer of $800 million for Souq. However, there are rumors that the U.S. firm is paying only $650 million for the company. According to deal adviser Goldman Sachs, the deal is “the biggest-ever technology M&A transaction in the Arab world.”

After the e-commerce platform raised $275 million from investors last year, CB Insights valued it at over a billion dollars. South Africa’s Naspers Ltd holds a 36.4% stake in Souq.com. Tiger Global Management also owns a stake in the retailer, according to Reuters.

Speaking about the deal, Amazon Senior Vice President Russ Grandinetti said, “Amazon and Souq share the same DNA. We’re 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.”

Souq – a good buy by Amazon

Amazon has been eyeing the lucrative Middle East for quite some time now, and this acquisition marks its first move to make its presence felt in the region.  According to Mouchawar estimates, online shopping in the Middle East was worth about $20 billion last year. Standard Chartered estimates a 30% increase in the region’s e-commerce business and believes many markets are still untapped.

Souq launched in 2005 and offers over 8.4 million products across 31 categories. The company has localized operations in Saudi Arabia, United Arab Emirates and Egypt and gets more than 45 million visits per month, according to the BBC. It started operations in the Middle East with just five people in Dubai, and now, it employs about 3,000 workers across the Arab world.

In a statement, Souq said, “Joining the Amazon family will enable souq.com to continue growing while working with Amazon to bring even more products and offerings to customers worldwide.”

The deal enjoys the backing of the Dubai government, which is counting on technology as the retail sector booms in the Emirates, notes Reuters. Dubai Crown Prince Sheikh Hamdan bin Mohammed bin Rashid al-Maktoum said this acquisition establishes the region’s position “as a regional and global hub for the world’s biggest and leading organizations.”