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Amazon to Expand in the Middle East with Souq.Com Buyout

Zacks

As reported by Bloomberg, Amazon.com Inc. AMZN is in talks to buy a Dubai-based ecommerce giant, Souq.com, for approximately $1 billion.

Shares of Amazon have been steadily treading higher on a year-to-date basis. The stock has returned 15.46% compared with the Zacks Electronic Commerce industry’s gain of 10.65%.

More Details

Souq.com is a Dubai-based online retail service. It sells more than 1.5 million products to customers in the United Arab Emirates, Egypt and Saudi Arabia. The company recently secured $275 million of funding from its investors.


Reportedly, Souq.com plans to sell around 30% stake but Amazon is eyeing the entire site, thus trying to expand its footprint in the high-growth Middle East market.

Reports say that no final agreement has yet been reached and negotiations could falter.

Conclusion

Amazon is one of the largest online retailers in the world, with extensive operations in North America. Although the primary product line was books, now the company has diversified into a host of other product categories and therefore wants to spread all over the world.

Though the company has more or less been successful in penetrating every region worldwide, it has still miles away to go before gaining a strong foothold in Middle East region and Africa. Its retail market share is still relatively small in these markets, but there is a good possibility of its capturing a significant share of the Middle East within the next few years. It this happens the company would see an additional several billion dollars a year in revenue.

This deal, if it materializes, would certainly help Jeff Bezos and his company to establish a presence in key and emerging markets like Egypt, Saudi Arabia, and the UAE.

AMAZON.COM INC Price and Consensus

AMAZON.COM INC Price and Consensus | AMAZON.COM INC Quote

Currently, Amazon has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Cognex Corporation (CGNX), Itron, Inc. (ITRI) and Teradyne Inc. (TER) with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cognex Corporation delivered a positive earnings surprise of 24.92% in the trailing four quarters.

Itron, Inc. delivered a positive earnings surprise of 30.55%, on average, in the trailing four quarters.

Teradyne Inc. delivered a positive earnings surprise of 19.26% in the trailing four quarters.

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