Dubai: Shareholders in the online vendor Souq.com have an interesting choice to make. According to sources, they are debating between either going for a deal with e-retailing behemoth Amazon or opting for a sale to the region’s brick-and-mortar giant Emaar Malls.
None of the players involved is talking, but according to insiders, two offers have been made. Emaar Malls has made a $800 million (Dh2.9 billion) offer, while Amazon has offered $600 million, a deal which looked to have fallen apart in January.
Whichever way the Souq shareholders go, one thing is clear — the Middle East’s online space is set for a seismic change.
Sources in the know say that a Souq deal provides Emaar Malls — which owns The Dubai Mall and Dubai Marina Mall — with a strategic fit with its expanding portfolio of physical retail assets. That would include another huge retail destination at the under development Dubai Creek Harbour.
“It will be a win-win for Emaar Malls if the Souq [deal] happens,” said the industry source. “It gives the mall owner one additional platform to target consumers.
“And it would aid in any future move towards click-and-collect, which will be part of the ‘omni-channel’ experience that will be critical for the next phase of growth in retail. It’s happening in mature retail markets elsewhere … and it’s bound to be a factor soon enough here. It will be experiential retailing at its best.”
The thinking is straightforward — Emaar Malls can offer all of its retailers one additional piece of “real estate” — through the Souq.com platform — to reach out.
Amazon too will need Souq.com it wants to expand in the region. The Souq platform provides a ready-made structure and a consumer base it can leverage if it wants to get into these markets. And at some point, Amazon is looking to scale up beyond the UAE and Saudi Arabia, the two leading eCommerce markets in the region, to take in the rest of the region. And, just as importantly, it could use Souq as a jumping off point for North Africa.
Souq.com’s shareholders include co-founder and CEO Ronaldo Mouchawar, New York Tiger Global Management and South Africa based Naspers. Others include Standard Chartered Private Equity and IFC, part of the World Bank stable.
The Emaar Malls’ proposal — backed up by a $500 million convertible deposit — is not to be confused with Chairman Mohammad Alabbar’s plan to set up Noon.com, a marketplace with as many as 20 million products. Noon.com is a private venture by Alabbar and other regional investors. (Alabbar is also participating in other online-related ventures, either on his own initiative or in alliance with key investors. Noon.com is one such initiative.)
Market sources are unsure whether Emaar Malls might conceivably try and rope in other shareholders or will prefer to go it alone.
Position of strength
It is not known whether Emaar Malls made an open offer or one that will be on the table for a limited period only.
But for Alabbar, a Souq.com deal on top of the Noon.com launch places him in a position of strength in the online marketplace category. Souq.com stocks 8.4 million products, add Noon.com’s 20 million and that would be enough to sew up the mass market between them.
And for Souq, the coming days — unlikely to be weeks — will decide which way it wants to go. Chances of it remaining without a deal is next to remote.