Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

International companies attempting to enter GCC markets can overcome regional challenges through M&A activities.

Strategic mergers and acquisitions have emerged as a way to tackle hurdles worldwide companies encounter in Arab Gulf countries and emerging markets. Companies attempting to enter and grow their reach into the GCC countries face different difficulties, such as for instance cultural differences, unfamiliar regulatory frameworks, and market competition. However, when they acquire regional companies or merge with local enterprises, they gain immediate use of local knowledge and learn from their regional partner's sucess. The most prominent examples of successful acquisitions in GCC markets is when a giant worldwide e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce company recognised as a strong contender. But, the purchase not merely eliminated local competition but in addition provided valuable regional insights, a customer base, and an already founded convenient infrastructure. Additionally, another notable instance is the acquisition of a Arab super application, specifically a ridesharing company, by the worldwide ride-hailing services provider. The multinational corporation gained a well-established manufacturer having a large user base and considerable familiarity with the local transportation market and consumer choices through the acquisition.

In a recent study that investigates 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, big Arab banking institutions secured acquisitions through the financial crises. Furthermore, the analysis demonstrates that state-owned enterprises are less likely than non-SOEs in order to make takeovers during periods of high economic policy uncertainty. The the findings indicate that SOEs are more cautious regarding acquisitions compared to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, stems from the imperative to preserve national interest and minimising potential financial uncertainty. Moreover, takeovers during periods of high economic policy uncertainty are associated with a rise in investors' wealth for acquirers, and this wealth effect is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by buying undervalued target businesses.

GCC governments actively encourage mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a means to solidify industries and develop local businesses to become capable of compete on a worldwide scale, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives a lot of the M&A activities into the GCC. GCC countries are working earnestly to draw in FDI by developing a favourable ecosystem and increasing the ease of doing business for international investors. This strategy is not merely directed to attract foreign investors because they will contribute to economic growth but, more crucially, to enable M&A deals, which in turn will play an important part in permitting GCC-based businesses to achieve access to international markets and transfer technology and expertise.