Nov 24, 2017 Last Updated 17:04 PM EST

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Amazon acquires e-commerce platform Souq.com

Mar 29, 2017 10:40 AM EDT

Amazon confirms reports that said it has acquired Souq.com, an e-commerce marketplace that serves the Middle East based in Dubai. The acquisition marks as a coming-of-age of the Middle East e-commerce sector according to technology experts.

On Tuesday, Amazon and Souq.com agreed on the takeover despite a last minute bid by Dubai billionaire Mohamed Alabbar of Emaar Malls coming with an offer worth $800 million.

Amazon executives did not disclose the value of the deal to which Goldman Sachs refer as the "the biggest-ever technology M&A transaction in the Arab world." This marks the first move of Amazon to serve the Middle East region that covers of almost 50 million consumers, in addition to an untapped market. Notably, only two percent of the region's retail is made through online.

"Amazon and Souq.com share the same DNA - we're both driven by customers, invention, and long-term thinking," Russ Grandinetti, Amazon senior vice president, International Consumer, said in a statement. Souq will give Amazon an easy breakthrough as it has both payments and fulfillment infrastructure. Further, it has a marketplace with 4 million products and works with thousands of merchants to help sell its goods online. 

"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," Souq.com CEO and co-founder Ronaldo Mouchawar added. Meanwhile, technology experts describe the acquisition as a coming-of-age moment for e-commerce in the Middle East as the industry is less advanced than what people might think. Bringing a global leader like Amazon will help the sector grow in the region.

Another tech expert claims the deal to be remarkable given that Amazon has a reputation of not buying companies. Despite the young and tech-savvy population in the Middle East, most consumers still prefer shopping in stores. Amazon remains unshaken as it is already figuring out how to grow the team and business in the region. 

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