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 looking to expand their operations in the Arab Gulf.

GCC governments actively encourage mergers and acquisitions through incentives such as for example taxation breaks and regulatory approval as a means to consolidate industries and develop regional businesses to be effective at compete on a global scale, as would Amin Nasser likely tell you. The necessity for financial diversification and market expansion drives a lot of the M&A activities in the GCC. GCC countries are working earnestly to invite FDI by making a favourable ecosystem and bettering the ease of doing business for foreign investors. This strategy is not only directed to attract foreign investors simply because they will add to economic growth but, more most importantly, to facilitate M&A deals, which in turn will play a significant role in permitting GCC-based businesses to get access to international markets and transfer technology and expertise.

In recently published 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 behaviour of Western companies. For instance, large Arab banking institutions secured acquisitions throughout the 2008 crises. Also, the study shows that state-owned enterprises are more unlikely than non-SOEs to help make takeovers during times of high economic policy uncertainty. The the findings suggest that SOEs are far more cautious 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 protect 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 effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by capturing undervalued target businesses.

Strategic mergers and acquisitions are seen as a way to overcome obstacles worldwide businesses face in Arab Gulf countries and emerging markets. Companies planning to enter and grow their reach within the GCC countries face various challenges, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. But, if they acquire local companies or merge with local enterprises, they gain immediate access to regional knowledge and learn from their local partners. One of the more prominent examples of effective acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce firm recognised being a strong competitor. However, the purchase not merely eliminated local competition but in addition provided valuable local insights, a customer base, plus an already established convenient infrastructure. Additionally, another notable instance may be the acquisition of a Arab super software, specifically a ridesharing company, by the worldwide ride-hailing services provider. The international company obtained a well-established brand name with a big user base and substantial understanding of the area transportation market and customer choices through the purchase.