Emaar Malls confirms $800m bid for Souq.com
Emaar Malls has submitted an US$800 million bid for Souq.com after months of speculation around potential buyers for the Middle Easte online retailer.
The bid has so far not been accepted by Souq.com’s shareholders, Emaar Malls said in a bourse statement. The Emaar Malls stock fell 2 per cent yesterday.
Speculation about a potential sale of Souq has been circulating for months with Amazon, the world’s biggest online retailer, linked to the purchase of the site as recently as last week.
China’s Alibaba has also shown interest in the group as well as the Dubai retail group Majid Al Futtaim. However, the Emaar Malls bid surprised many industry watchers.
Last week interest from Amazon.com resurfaced with a bid of about $650m, according to a person familiar with the offer.
The online retailer had reportedly baulked at the asking price of around $1 billion in January and had left the negotiating table.
Amazon and Souq.com have refused multiple requests for comment. Emaar Malls also declined a request for further comment after it released its statement to the Dubai Financial Market.
“Emaar Malls has submitted a bid of $800m for Souq.com in line with the strategy to align e-commerce with physical shopping,” said the statement signed by Ahmad Thani Al Matrooshi, the vice chairman of Emaar Malls. The bid from Emaar Malls has surprised observers because chairman Mohamed Alabbar is also behind the e-commerce platform noon.com.
The ambitious venture, funded by a $1bn investment from the Saudi government and 65 private Arabian Gulf investors, was announced by Mr Alabbar in November and was supposed to launch in January.
The Emaar Malls bid would appear to put Mr Alabbar in competition with himself.
“High drama in our corner of the world,” said Omar Kassim, the founder of market platform JadoPado.com. “An interesting development even though I think the Amazon transaction is almost wrapped up. This will give some shareholders [souq.com] pause as the delta between Amazon’s assumed offer of $650m and Emaar Malls’ bid is $150m [higher].
“The management team have a fiduciary duty to their shareholders to achieve the best possible outcome.”
The sale of Souq.com comes as traditional retailers in Dubai start to come under pressure as consumers seek cheaper deals online.
“Bricks and mortar growth is slowing whereas online has huge growth potential,” said David Macadam, the chief executive at the Middle East Council of Shopping Centres.
“Dubai Mall and Marina Mall are fantastic but they cannot offer the growth that online can.
Online sales make up about 3 per cent of the region’s sales against 12-15 per cent in more mature geographies. The bricks and mortar business with the online business would have some great synergies.”
Instant analysis by Sabah Al Binali:
The takeover talk around Souq.com has people talking about what, exactly, the valuation is. To me, that is not the instructive number.
The instructive number is how many years it took to get Souq.com to this point. Founded in 2005, Souq.com is now 12 years old. This is how long it takes to build a company.
If you’re lucky, or based in a large, rich economy like the US, you might get a sale faster than that. I think that it is an important lesson for all entrepreneurs, building a company is a decade long process.
Best of luck to the Souq.com team, they deserve it.
Sabah Al Binali is a weekly columnist for The National.
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