Dubai’s Majid Al Futtaim CEO: Souq.com is a great company
DAVOS // Majid Al Futtaim Holding wants to expand its e-commerce operations and would not rule out an acquisition of Souq.com, the online trader that has been at the centre of takeover speculation.
Alain Bejjani, the chief executive of the retail conglomerate behind Mall of the Emirates, said: “Digital trading is very important for us. It is absolutely necessary to grow it. I cannot imagine a company in our business without omni-channel trading capacity.”
He was speaking on the sidelines of the World Economic Forum in Davos, Switzerland.
He declined to comment specifically on a potential acquisition of Souq, despite reports last week linking Maf to a possible purchase. “We never comment on speculation. But I believe Souq is a great company. I’ve got a lot of respect for what they’ve done, building a company like that from scratch.”
Souq, being advised by Goldman Sachs on a disposal, had been in talks with two potential buyers, including American online giant Amazon, but these are believed to have ended after a disagreement over valuation.
The Dubai-based company was believed to be seeking US$1 billion, way ahead of the $700 million Amazon is thought to have offered. Indian trader Flipkart Online Services was also believed to be interested.
Whether or not a bid for Souq emerges from Maf, Mr Bejjani will continue to grow its e-commerce business.
“We’re investing in it in a big way and we have very ambitious plans. The e-commerce pure-play landscape in the region has changed dramatically in a short space of time,” he said.
In addition to Amazon’s interest in the Middle East, he pointed to the imminent launch of Noon, the e-commerce company set up by Dubai’s Mohamed Alabbar, and increasing interest in the region from Alibaba of China.
“In the past, everybody wanted to sell to the Middle East but did not want to physically be here. That has all changed,” Mr Bejjani said.
However, he sounded a note of caution on the big valuations in e-commerce. “Mergers and acquisitions are usually value-destructive for the acquirer. If it made sense to us from a value point of view, we would consider it.”
Mr Bejjani was in Davos to appear on expert panels on retail and consumer sectors, under the theme “responsible and responsive leadership”.
“There has been a change in consumer behaviour. People are now just as interested in the experience as they are in the product and the price,” he said.
Maf’s business in 2016 was affected by the strong dollar, the low oil price and security issues in the Middle East. But he still predicted a “strong year, with strong growth” when Maf reports full-year figures this month. “We’ve had challenges, but we’ve dealt with them,” he said.
In the flagship Mall of the Emirates in Dubai, extensive refurbishment has started to pay off, he said, and there will be further improvements at the mall, the biggest single revenue earner in the group. Last year Maf announced a Dh30bn programme of investment in UAE malls and leisure facilities.
The Mall of Egypt, which has its own indoor ski slope and a cinema complex, will open on the outskirts of Cairo in March.
Mr Bejjani sees great potential in the lucrative Carrefour business. Maf has the French hypermarket franchise in 38 countries, but has so far only opened stores in 16 of them.
Maf’s expanding hotels portfolio has been affected by downward pressure on revenue per room, but occupancy was holding up, he said.
He added that the group’s financial position was sound, and it had no need to tap international debt markets. “We have a BBB rating, which is the highest for a privately owned company in the Middle East,” he said.
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Updated: January 21, 2017 04:00 AM