Amazon's Acquisition of Dubai Based E-Commerce Company Souq.com

May 19, 2017

In this episode of TechTalk, we discuss recent mergers and acquisitions in e-commerce including Amazon's recent acquisition of Souq, a Dubai based e-commerce company. Souq had other interested parties such as a local mall developer who ended up backing Noon - another Middle Eastern e-commerce site and Souq competitor.

Why is this an important tech acquisition for Amazon? Not only are they entering a market with significant growth potential but geographically there might be a showdown between Amazon and Alibaba in the rapidly developing Indian market. It looks like things are looking pretty rosy for Amazon’s CEO Jeff Bazos who just passed Warren Buffet to become the second wealthiest person on the planet.

Transcript

Dave Plaskow: Hello and welcome to EisnerAmper’s Technology podcast series. With more than 500 technology clients, we’re always interested in the latest trends and developments as well as any related business and accounting opportunities and challenges. Today we’re talking about Amazon’s acquisition of Middle Eastern e-commerce company Souq. I’m your host Dave Plaskow and with us today is Dave Katz, senior audit manager in EisnerAmper’s technology and life science practice. You know it, you love it, it’s TechTalk. Dave, greetings and salutations.

Dave Katz:Dave, good to be here again.

DP: So Dave, it looks like Amazon has taken another step on its way to global domination.

DK: Yep, here we are talking Amazon again in their acquisition of Dubai based Souq.com.

DP: Tell us a little bit about Souq.

DK: Sure, so founded in 2005 by Syrian entrepreneur Ronaldo Mouchawar, has about 45 million monthly online visitors and sells more than 8 million products to the UAE, Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and Egypt - company valued at about a billion dollars and has 3000 or so employees

DP: Ok, so that’s decent sized company. What does the deal look like?

DK: So terms weren’t yet disclosed but it’s estimated the deal is valued between $615 - $800 million. Interestingly Amazon was only looking to acquire about a 30% stake, and then it went all in and did the whole thing here, so. Goldman Sachs who handled the deal called this the biggest ever technology M&A transaction in this part of the world.

DP: Ok. And Souq had a few other interested parties, correct?

DK: Yeah, there were a few others - eBay, some other local retail groups were kicking the tires here, and the Dubai based Maude developer reportedly made an $800 million offer and that developer is now backing another Middle Eastern e-commerce site, Noon, which hopes to go live this year.

DP: Ok, so a lot of e-commerce activity in that part of the world. What is the Middle Eastern E-tail landscape look like?

DK: So currently only about 2% of retail purchases there are made online, which seems like a low number, but online sales growth is expected to grow at about 30% annually and eclipse $27 billion by 2020. So that’s due to a growing population of younger tech oriented customers, and you see the rest of the world where a lot is going to the internet.

DP: Sure sure, a lot of room for growth there. Now why is this an important acquisition for Amazon?

DK: Yeah, so, they’re entering a market with significant growth potential like I mentioned, and then geographically you may be looking at a showdown between Amazon and Alibaba in the rapidly developing Indian market.

DP: Yup, a couple of powerhouses there. So it looks like things are looking pretty rosy for Amazon’s CEO Jeff Bazos these days.

DK: Yeah, you could say that. He just passed Warren Buffet to become the second wealthiest person on the planet. Net worth of somewhere around $75 billion.

DP: Wow, yeah, that’s certainly nothing to sneeze at.

DK: Nope.

DP: Well gracias Dave, again, as always for your insights.

DK: Thanks for having me Dave.

DP: And thank you for listening to TechTalk as part of the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.

About John Pennett

john Pennett is the Partner-in-Charge of the National Technology and Life Sciences Group, and is a member of the Special Purpose Acquisition Company (SPAC) services team. H

More in This Series

Doctor of Innovation: When Passion and Health Care Intersect

In this episode of TechTalk, Director of Innovaccer Dipty Desai, Ph.D., joins Amar Bhatkhande to discuss her journey as a researcher, entrepreneur, funder, and mentor where she uses technology to solve health care issues and explains how entrepreneurs can be at the forefront of innovation and science.

Taking the Plunge: From Techie to Entrepreneur

In this TechTalk podcast episode, Amar Bhatkhande asks Rajesh Abhyankar of MediaAgility about how he started and grew his global digital consulting business to upwards of 400 employees—and what excites him about the future.

Entrepreneurs: Conversations Count

Conversations are at the root of entrepreneurship. In this TechTalk podcast episode, Amar Bhatkhandé sits down with Charly Weinstein for a conversation about leading and growing a business.

Lessons Learned from the Theranos Dissolution

A senior manager in EisnerAmper’s Technology and Life Sciences practice, talks about the rise and fall of Theranos. He explains what took them from biotech unicorn to dissolution, the fallout, and how companies and investors can mitigate risk.

Ride Sharing Capped in NYC

In this episode of the Dave & Dave Show, we look at New York City’s proposed annual cap on the number of ride-sharing vehicles, such as Uber and Lyft, and the larger implications for this unique urban initiative.

New Cryptocurrency Focuses on Price Stability

Cryptocurrency still has the reputation for significant price swings. In this episode of the Dave & Dave Show, we look at a new contender—with some big backers—that’s tied to the U.S. dollar to help temper that volatility.

Drones, a Farmer’s New Best Friend?

TechTalk takes a look at a tech startup, Aerobotics, that is using drones to help farmers in South Africa.

A 3D Printed Community

In this episode of TechTalk, we look at a 3D-printed housing community for needy families in El Salvador, the goals are, some of the attached business issues, and how this could be a technological game-changer for affordable housing.

At-Home Genetic Testing Goes Beyond Just DNA

The Dave and Dave Show looks at 23andMe’s DNA test-taking kit, its recent approval by the FDA to scan for certain breast cancer genes, where the market is headed, and what it means for the biotech industry and its business advisors.

Amazon Stays Busy

TechTalk examines a few interesting things Amazon is up to on its march toward global e-tail domination, such as its choosing a city for its new headquarters, its foray into health care, Amazon Go and more.

Apple Watch EKG

This episode of TechTalk, we cover a unique, FDA-approved EKG device for the Apple Watch. We’ll discuss the science and the business behind this promising new technology, as well as how the market for smart watches is doing.

Technology Potpourri

In this final TechTalk podcast of 2017, we examine the technology headlines that caught our attention toward the end of the year, including net neutrality, the data hack at Uber, some misbehaving drones and what might be on the menu for 2018.

Is AI Destined to Replace Fund Managers?

In this episode of TechTalk, we talk about the debut of the world’s first ETF powered by artificial intelligence (AI). We discuss the technology behind it, if it impacts a fund’s expense ratio and, most importantly, how it’s performing.

Looking into Facial Recognition Technology

The iPhone X has put a renewed spotlight on facial recognition technology. Dave Katz gives us a history on this type of technology, some of the privacy and security issues, what the market looks like and which companies are leading the charge.

Supersonic Air Travel Coming Back with a Boom

In this episode of TechTalk, we discuss the technology and financing issues related to the possible return of supersonic air travel.

Is Roomba Vacuuming Up Data on Your Home?

Will the robot vacuum collect customer household data and offer it to technology companies to enhance internet of things devices? Here is what information is being collected, potential data privacy and security issues, and iRobot’s response to consumer concerns.

Tesla Gets Chinese Backing

In this episode of TechTalk, Dave Katz tells us about electric car company Tesla receiving a significant investment from Chinese technology giant Tencent.

The Market for Tech Talent

With tech jobs are estimated to double over the next decade, we discuss the market for tech talent and what the forecast for tech employment looks like.

Amazon Go Wants to Streamline Your Grocery Shopping

Dave Katz, Senior Audit Manager in EisnerAmper’s Technology and Life Sciences Practice, and Richard Colloca, Partner-in-Charge of EisnerAmper’s Food and Beverage Group, discuss Amazon’s plan to use 'Just Walk Out Technology.'

Being Taken For a Ride – The Self-Driving Car

David Katz gives a “state of the union” on self-driving cars, an overview of Uber’s unique experiment in Pittsburgh, and a glimpse of what we can expect in the marketplace.

Biotech Faces a Real Estate Shortage

In this episode of TechTalk, we learn about the real estate shortage for biotech hubs, the challenges of obtaining new space, how early-stage companies are coping, and what’s on the drawing board to help alleviate the shortage.

Hyperloop Could Take People from LA to SF in 35 Minutes

In this episode of TechTalk, we discuss space-age technology that could revolutionize personal travel and commercial traffic.

Is the Commercial Drone Market Ready for Takeoff?

David in EisnerAmper's Technology and Life Sciences Practice, discusses the commercial drone market, including potential markets, barriers to entry and where capital investment is headed.

Virtual Reality

We discusses some of the financial aspects of virtual reality, such as investment, valuation, revenue recognition and more.