Amazon purchased the Middle East's biggest online retailer Souq.com on Tuesday for an undisclosed amount, a day after a state-backed firm disclosed an $800 million counteroffer.

A joint statement described the purchase as expanding Amazon's influence into the Mideast as the state-supported firm Emaar prepares to launch its own retail website in a country known more for its luxury malls than online shopping.

That could put Seattle-based Amazon in a head-to-head competition with a firm helmed by one of the sheikhdom's favored business magnates.

"This is a milestone for the online shopping space in the region," Souq.com co-founder and CEO Ronaldo Mouchawar said in a statement.

The announcement said the two companies expect the sale to close this year.

"By becoming part of the Amazon family, we'll be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon's great track record of empowering sellers," he said in the statement.

Amazon senior vice president Russ Grandinetti said the deal made sense as both companies "share the same DNA".

"We're both driven by customers, invention and long-term thinking," he said.

"We're looking forward to both learning from and supporting them with Amazon technology and global resources."

Souq.com won a major vote of confidence last year and emerged as the highest-valued internet company in the region when it secured $275 million in funding from international investors to support its growth.

At the time, Mouchawar said the e-commerce market in the Middle East was "growing very fast" and expected to reach $20 billion in 2016.

Souq.com attracts over 45 million visits per month.

Known for its huge online retail operations, Amazon has been expanding into areas including cloud computing and streaming video where it is trying to rival Netflix.

But retail remains at its core, with its retail operations taking in $26 billion in North America and $14 billion in the rest of the world in the last quarter of 2016.