Exactly why M&As in GCC countries are recommended

Exactly why M&As in GCC countries are recommended

Blog Article

Strategic alliances and acquisitions are effective strategies for multinational companies looking to expand their operations in the Arab Gulf.

In a recently available study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers found that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western companies. For instance, large Arab financial institutions secured acquisitions through the 2008 crises. Also, the research demonstrates that state-owned enterprises are less likely than non-SOEs to create acquisitions during times of high economic policy uncertainty. The the findings indicate that SOEs tend to be more prudent regarding takeovers when comparing 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 mitigate prospective financial uncertainty. Moreover, acquisitions during times of high economic policy uncertainty are related to an increase in investors' wealth for acquirers, and this wealth impact is more pronounced for SOEs. Indeed, this wealth impact highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by buying undervalued target companies.

Strategic mergers and acquisitions have emerged as a way to tackle obstacles international companies face in Arab Gulf countries and emerging markets. Companies planning to enter and expand their presence into the GCC countries face various challenges, such as for example cultural differences, unfamiliar regulatory frameworks, and market competition. But, once they acquire regional businesses or merge with local enterprises, they gain immediate access to regional knowledge and learn from their regional partner's sucess. One of the most prominent cases of successful acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce company recognised as being a strong competitor. Nevertheless, the purchase not only removed local competition but also provided valuable local insights, a client base, and an already founded convenient infrastructure. Moreover, another notable instance may be the purchase of an Arab super app, specifically a ridesharing company, by the international ride-hailing services provider. The international corporation gained a well-established brand name by having a large user base and considerable knowledge of the area transportation market and client preferences through the purchase.

GCC governments actively promote mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a method to consolidate companies and build up local companies to be have the capacity to contending at an a global level, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives a lot of the M&A transactions into the GCC. GCC countries are working earnestly to draw in FDI by creating a favourable environment and bettering the ease of doing business for foreign investors. This strategy is not merely directed to attract foreign investors simply because they will add to economic growth but, more crucially, to facilitate M&A deals, which in turn will play a significant role in enabling GCC-based companies to achieve access to international markets and transfer technology and expertise.