Emaar Malls Bids $800 Million for Souq to Challenge Amazon

Updated on
  • Emaar Chairman Alabbar focusing on technology investments
  • Company says bid to align e-commerce with physical shopping

Emaar Malls PJSC, the operator of the world’s biggest shopping center, bid $800 million for online retailer Souq.com, challenging an offer made by Amazon.com Inc.

The retail division of Emaar Properties PJSC, the developer of the world’s tallest skyscraper in Dubai and run by Mohamed Alabbar, said the bid hasn’t been accepted yet by Souq.com shareholders, according to an emailed statement from the company on Monday. Any impact on the company’s profit after a deal has been reached wouldn’t be material, it said.

Emaar Chairman Alabbar is increasingly focusing on technology investments and is leading a $1 billion investment company formed with other regional investors. He raised a similar amount from investors including Saudi Arabia’s sovereign wealth fund to create e-commerce firm Noon, bought a stake in regional logistics firm Aramex PJSC in July as well as 4 percent of Yoox Net-a-Porter for 100 million euros in April.

Buying Souq.com would be "complementary" for Emaar Malls, Sanyalak Manibhandu, the head of research at brokerage NBAD Securities LLC, said by e-mail on Monday. Emaar Malls is a market place for high and mid-end products, while "Souq.com is an online forum for buying goods and services at competitive prices," he said.

Emaar Malls’ shares were unchanged at 2.54 dirhams at 10:43 a.m. in Dubai. They have fallen 3.1 percent this year, compared to a 2.2 percent drop in the exchange’s benchmark index.

Largest Mall

Emaar Malls owns Dubai Mall, the world’s biggest shopping center by total area, Souk Al Bahar, a dining and entertainment development, Dubai Marina Mall and the Gold & Diamond Park. Emaar is expanding Dubai Mall’s Fashion Avenue by another 1 million square feet to add 150 new brands in a bid to attract over 100 million visitors over the next three to four years.

Emaar Malls reported a 13 percent rise in profit in 2016 to 1.87 billion dirhams ($510 million). It had cash and cash equivalents of $967 million at the end of the year, according to its financial results.

Amazon restarted talks to acquire Souq.com in a deal valued at as much as $650 million after walking away earlier this year, people familiar with the matter said earlier this month. Souq.com was valued at $1 billion in its last funding round, people with knowledge of the matter said in April 2015. The retailer raised $275 million, making it the most valuable internet company in the Middle East, according to Standard Chartered Plc, which had invested in the company.

Dubai-based Souq.com’s existing investors include Tiger Global Management and South Africa’s Naspers Ltd. The company hired Goldman Sachs Group Inc. to find buyers for a stake last year, people said at the time.

— With assistance by Matthew Martin

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