Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

Strategic alliances and acquisitions are effective strategies for multinational businesses planning to expand their presence into the Arab Gulf.

GCC governments actively promote mergers and acquisitions through incentives such as tax breaks and regulatory approval as a way to solidify companies and build regional companies to be effective at compete on a international level, as would Amin Nasser likely let you know. The need for economic diversification and market expansion drives a lot of the M&A deals in the GCC. GCC countries are working earnestly to attract FDI by developing a favourable ecosystem and increasing the ease of doing business for international investors. This strategy is not only directed to attract international investors because they will contribute to economic growth but, more most importantly, to facilitate M&A deals, which in turn will play a substantial part in allowing GCC-based companies to get access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions are seen as a way to tackle hurdles international businesses encounter in Arab Gulf countries and emerging markets. Companies wanting to enter and grow their reach in the GCC countries face various difficulties, such as cultural differences, unknown regulatory frameworks, and market competition. But, when they acquire regional companies or merge with regional enterprises, they gain immediate usage of regional knowledge and learn from their local partner's sucess. One of the more prominent examples of successful acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce company recognised as being a strong contender. Nevertheless, the purchase not only eliminated regional competition but also offered valuable regional insights, a customer base, and an already established convenient infrastructure. Additionally, another notable example is the acquisition of an Arab super software, namely a ridesharing company, by the worldwide ride-hailing services provider. The international corporation obtained a well-established brand name with a large user base and substantial familiarity with the local transport market and customer choices through the purchase.

In recently published study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors discovered that Arab Gulf firms are more inclined to make acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western firms. For example, large Arab banking institutions secured acquisitions during the 2008 crises. Also, the study shows that state-owned enterprises are not as likely than non-SOEs to produce takeovers during times of high economic policy uncertainty. The the findings indicate that SOEs are more prudent regarding takeovers in comparison to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, emanates from the imperative to preserve national interest and mitigate potential financial instability. Furthermore, takeovers during periods of high economic policy uncertainty are connected with an increase in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Indeed, this wealth effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by buying undervalued target businesses.