The US-based e-commerce giants Amazon and its Indian replica Flipkart has stepped down from acquiring Dubai’s e-commerce web portal Souq.com despite the deal being a US$1 billion worth. Both the firms were in talks to acquire the e-commerce website but the reports of backing out months earlier direct towards an increasing level of competition in the market of Mergers & Acquisitions.
The sole reason behind walking away from the acquisition was disagreement over price and setting standards. In fact, as per the knowledge of the matter, the Dubai-based e-commerce website is now searching potential investors subsequently negotiating with mall operator Majid-Al-Futtaim in confinement as the issue has not yet been made public.
Entering into a deal at the price of 1 billion USD, Amazon and Souq went ahead after having a similar nod from the existing investors like Tiger Global Management, Standard Chartered Private Equity as well as Naspers Ltd. The respective investors also backup Flipkart Inc. in India. The deal was finalised after the appointed agency from Dubai, Goldman Sachs Group Inc. came with a renowned buyer which were Amazon followed by Flipkart.
Middle East’s highest valued online company, Souq.com raised as many as $275 million from a seed funding round in February 2016. The e-commerce website carries 1.75 million products which are delivered in nations like United Arab Emirates, Egypt, Saudi Arabia and so on through its logistics services. Gross income closing at around 400 million USD, the e-commerce website is also engaged in investing other startups which hail from Middle East region.
Although the actual reason disclosed from Flipkart and Amazon, there are chances that it might be the losses for the present quarter, especially faced by Flipkart Inc., as well as upcoming investments in its own segment of e-commerce for Amazon in India, they both walked away from acquiring Souq.com.