DUBAI: Dubai’s Emaar Malls, operator of glitzy Middle East shopping centres, 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 Ronaldo Mouchawar.
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 $580m bid, a source familiar with the matter said. The Financial Times reported Amazon would pay between $650 and $750m, 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 source said.
The Emaar Malls bid includes a $500m 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 behaviour,” said Sanyalaksna Manibhandu, head of research at NBAD Securities.
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 worlds 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.
Originally set to open for business with 20m 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 units 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 per cent of the emirate’s luxury goods spending and is one of the Middle East’s largest shopping centres.
Published in Dawn, March 28th, 2017
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