*EDITS THROUGHOUT
By Barry Eitel
SAN FRANCISCO (AA) – Amazon announced Tuesday it would acquire Middle East online retailer Souq.com, the largest e-commerce platform in the Arab world.
Neither Amazon nor Souq, which is based in Dubai, United Arab Emirates, disclosed details of the deal, but Amazon approached Souq last November about acquiring a 30 percent stake for $1 billion.
Goldmann Sachs, which advised the two companies on the deal, called it the largest merger ever in the Arab world’s technology sector.
Founded in 2005, Souq has been described as the “Amazon of the Middle East”. It employs more than 3,000 workers and offers more than 400,000 products for sale.
"Amazon and Souq.com share the same DNA – we’re both driven by customers, invention, and long-term thinking,” Amazon Senior Vice President Russ Grandinetti said in a statement.
"Souq.com pioneered e-commerce in the Middle East, creating a great shopping experience for their customers. We're looking forward to both learning from and supporting them with Amazon technology and global resources. And together, we’ll work hard to provide the best possible service for millions of customers in the Middle East.”
Dubai billionaire Mohamed Alabbar, who owns the world’s largest mall, earlier this week attempted to undercut the deal with a bid of $800 million for Souq. Alabbar is attempting to popularize his own nascent online retailer, noon.com, that was founded last autumn.
Online shopping represents just a tiny fraction of retail in the Arab world, according to an analysis released in 2016 by the Oxford Business Group. Just 1 percent of products sold in the Middle East are bought on the web.
With Amazon’s resources, Souq hopes to conquer the young market.
"We are guided by many of the same principles as Amazon, and this acquisition is a critical next step in growing our e-commerce presence on behalf of customers across the region," Souq CEO and founder Ronaldo Mouchawar said in a statement.
“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,” Mouchawar said.
The deal is expected to close later this year but is subject to the approval of government regulators.