Successful M&A Middle East mergers and partnerships

Successful M&A Middle East mergers and partnerships

Blog Article

International companies wanting to enter GCC markets can overcome local challenges through M&A activities.

Strategic mergers and acquisitions have emerged as a way to tackle hurdles worldwide businesses face in Arab Gulf countries and emerging markets. Companies wanting to enter and expand their reach within the GCC countries face different problems, such as for example cultural differences, unfamiliar regulatory frameworks, and market competition. Nevertheless, once they buy regional businesses or merge with regional enterprises, they gain immediate use of local knowledge and learn from their local partners. The most prominent examples of successful acquisitions in GCC markets is when a giant international e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce corporation recognised being a strong competitor. Nevertheless, the acquisition not only eliminated local competition but also offered valuable local insights, a client base, plus an already founded convenient infrastructure. Additionally, another notable instance could be the purchase of a Arab super application, specifically a ridesharing company, by an international ride-hailing services provider. The multinational corporation obtained a well-established manufacturer by having a big user base and considerable familiarity with the area transportation market and client preferences through the acquisition.

In a recent study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers discovered that Arab Gulf firms are more likely to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western businesses. For instance, large Arab financial institutions secured acquisitions through the 2008 crises. Also, the study shows that state-owned enterprises are less likely than non-SOEs to make takeovers during times of high economic policy uncertainty. The results indicate that SOEs are far more cautious regarding acquisitions compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems from the imperative to preserve national interest and mitigate prospective financial uncertainty. Moreover, takeovers during times of high economic policy uncertainty are related to an increase in investors' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Certainly, this wealth effect highlights the potential for SOEs like the people 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 regional companies to become effective at competing at an a international scale, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives a lot of the M&A transactions in the GCC. GCC countries are working seriously to entice FDI by making 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 add to economic growth but, more crucially, to facilitate M&A deals, which in turn will play a significant part in allowing GCC-based businesses to gain access to international markets and transfer technology and expertise.