Though Amazon (AMZN) has grown to become a retail colossus largely on the back of giant internal investments, acquisitions have played an important and underappreciated role.
Generally, the purchases have involved firms that have carved out leading positions in growing niches -- whether in terms of products, geography or sales model -- and for which Amazon would have to expend a lot of time and money to replicate what the acquired firm has accomplished.
An acquisition of Middle Eastern online retailer/marketplace Souq.com would fit with this objective. And the timing of the deal would mesh well with reported plans for a major expansion of Prime Video's global footprint.
Sources tell Bloomberg Amazon is "considering a bid" to buy Souq, an 11-year-old company occasionally referred to as the "Amazon of the Middle East," for about $1 billion. It adds, Souq initially wanted to sell "a stake of at least 30 percent," and had hired Goldman to find stake buyers. Existing Souq investors such as Tiger Global Management, which invested in Souq earlier this year through a funding round reportedly featuring a $1 billion valuation, are also said to be thinking about selling shares.
Given the details surrounding the situation, it's possible sources close to Souq are trying to drum up interest in the company's share-sale efforts by giving the impression Amazon is ready to swoop in. And intensifying competition may have management and investors feeling this is a good time to partly or fully cash out: It was only a couple weeks ago that a $1 billion Middle Eastern e-commerce venture backed by Saudi Arabia's sovereign wealth fund was announced.