Emaar Malls' $800 million
bid for Souq.com to challenge Amazon
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[March 27, 2017]
By Alexander Cornwell and Tom Arnold
(Reuters) - Dubai's Emaar Malls, operator of glitzy Middle East shopping
centers, has made an $800 million offer for regional online retailer
Souq.com, setting up a potential bidding war with Amazon.com.
Emaar Malls’ bid has so far not been accepted by Souq.com shareholders,
the Dubai-listed firm said in a stock exchange announcement on Monday.
Reuters reported last week that Amazon had agreed in principle to buy
Souq.com, which was founded 12 years ago by Syrian-born entrepreneur
Amazon declined to comment, and Souq.com did not respond to an emailed
request for further comment.
However, Emaar Malls' offer is higher than Amazon's $580 million bid, a
source familiar with the matter said. The Financial Times reported
Amazon would pay between $650 and $750 million, quoting two sources
familiar with the matter.
However, Souq.com will have to break an exclusivity agreement with
Amazon if it is to accept the Emaar Malls offer at this stage, the
The Emaar Malls bid includes a $500 million up-front payment and a
guaranteed 15 per cent internal rate of return for Souq.com
shareholders, the source said.
A successful bid would give Emaar "a firmer footing in retail and
consumer behavior," said Sanyalaksna Manibhandu, head of research at
The offer is not the first move online to be made by Dubai billionaire
Mohamed Alabbar, who made his name as chairman of Emaar Properties, the
Dubai-government linked-developer of the world’s tallest building. Emaar
Malls is the retail unit of Emaar Properties.
Last year Alabbar raised $1 billion from regional investors including
Saudi Arabia's Public Investment Fund to set up his own Middle East
e-commerce firm Noon.
Days before announcing Noon, Alabbar and Amazon founder Jeff Bezos met
in Dubai, leading to speculation that they would forge some sort of
partnership in the region.
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People have their pictures taken near an Emaar sign outside the
Dubai Mall, UAE March 15, 2014. REUTERS/Ahmed Jadallah/File Photo
Originally set to open for business with 20 million products, Noon
quietly missed its January launch date. The company has yet to comment
on the delay.
Emaar Malls bid is independent of Noon, the source said, aimed at
complementing the retail unit’s brick-and-mortar sales by introducing
services such as “click and collect”. Shoppers in the Arab world prefer
to make purchases in-store despite a young and tech-savvy population.
Emaar Malls is the operator of the Dubai Mall, which accounts for around
50 percent of the emirate's luxury goods spending and is one of the
Middle East's largest shopping centers.
"Emaar's retail division will strengthen the case for online retail for
traditional brick and mortar retailers, by providing an avenue of online
retail," Euromonitor research analyst Rabia Yasmeen said in an email.
Alabbar has also made other investments in new technology and e-commerce
-- buying a stake in regional logistics firm Aramex last year and is in
the process of setting up a high-end Middle East online fashion retailer
with Yoox Net-a-Porter after buying a 4 percent stake in the
Italian-based online retailer for 100 million euros last April.
Alabbar has said he plans to use Aramex and Kuwait Food Co (Americana),
another company he bought into last year, to deliver Noon products.
He also has plans to develop a Middle East phone messaging service
similar to Facebook's popular Whatsapp.
South Africa's Naspers Ltd, which has said it holds a 36.4 percent stake
in Souq.com, declined to comment. Tiger Global Management also has a
stake in Souq.com.
(Additional reported by Saeed Azhar in Dubai and James Macharia in
Johannesburg; Editing by Keith Weir, Greg Mahlich)
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