Global e-commerce firm Amazon has reached an agreement to acquire Dubai-based Middle East online retailer Souq.com, the company confirmed on 28 March.

Amazon did not disclose the value of the deal, which places it in a strong position to win a major share in the region’s growing e-commerce sector.

The companies began discussions last year, and it is understood Souq.com was looking to sell its full shares at $1bn.

The firms were reported to have reached a deadlock in January, with Amazon reported to be willing to offer only between $580m and $650m.

Souq.com is understood to have considered seeking other potential investors, including local mall operator Majid al-Futtaim and Emaar Malls. The latter offered $800m for the deal, according to a report by news agency Reuters.

Syrian-born Ronaldo Mouchawar founded Souq.com 12 years ago. The online retailer is understood to sell more than 1.5 million products online to customers in the UAE, Egypt and Saudi Arabia.

Souq.com is likely to face major competition from Noon later this year. The $1bn e-commerce platform is backed by Saudi Arabia’s Public Investment Fund (PIF), which has a 50 per cent stake in the company, and a group of UAE investors led by Mohamad al-Abbar, chairman of Emaar Properties.

Noon was expected to begin operations in January, but it is understood this has been delayed based on the status of its website.