Amazon on Tuesday announced it’s acquiring SOUQ, a Middle Eastern eCommerce giant offering services in English and Arabic. The Dubai-based company is now set to join Amazon in the near future after both parties agreed to the acquisition in a deal that’s reportedly worth approximately $650 million, some industry watchers believe. Financial details of the deal weren’t officially announced, but previous reports indicated that SOUQ owners were seeking approximately $1 billion for the sale, a figure which the Seattle-based tech giant likely lowered following months of tough negotiations. In any case, Amazon confirmed that the transaction itself should be completed by the end of the year, following mandatory regulatory approvals and other closing conditions of the deal.
The acquisition of SOUQ will allow Amazon to solidify its position in the Middle East where the company is already doing a lot of business. Amazon’s Senior Vice President Russ Grandinetti described SOUQ as a firm that shares “the same DNA” with Amazon, referencing the fact that the Dubai-based online retailer is one of the most successful such companies operating in the region. While the deal will allow Amazon to fortify its presence in the Middle East, it will also provide SOUQ with the ability to improve its own services and become ever more competitive, the company’s Chief Executive Officer Ronaldo Mouchawar said. Even though Amazon’s announcement doesn’t specify the way in which the firm will integrate SOUQ into its family, it’s unlikely that the Dubai-based eCommerce giant will be rebranded and will likely continue operating under the same name following the acquisition.
While Amazon already has a reasonably strong presence in the Middle East and some may see this acquisition as unnecessary, the deal itself is in line with the company’s long-term strategy of aggressive investing into expansion. Despite the fact that Amazon’s revenue has been increasing quite rapidly for years now, the Seattle-based company still isn’t recording massive profits, mostly due to the fact that it’s adamant to reinvest all earnings into expanding its operations even further. This approach to doing business led Amazon to where it is today, so it’s unlikely that the firm will change its philosophy in the immediate future.