Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

Mergers and acquisitions in the GCC are largely driven by economic diversification and market expansion.

Strategic mergers and acquisitions are seen as a way to overcome hurdles worldwide companies encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their presence in the GCC countries face various problems, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. Nonetheless, once they acquire local businesses or merge with local enterprises, they gain instant usage of regional knowledge and learn from their local partners. One of the more prominent cases of effective acquisitions in GCC markets is when a giant international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce firm recognised being a strong competitor. Nevertheless, the acquisition not merely removed local competition but also offered valuable regional insights, a client base, as well as an already established convenient infrastructure. Furthermore, another notable instance may be the acquisition of an Arab super software, specifically a ridesharing company, by an worldwide ride-hailing services provider. The international business obtained a well-established manufacturer having a large user base and extensive familiarity with the area transportation market and customer choices through the purchase.

In a recent study that examines the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers found that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western companies. 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 acquisitions during periods of high economic policy uncertainty. The the findings indicate that SOEs are far more prudent regarding takeovers in comparison to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to preserve national interest and mitigate prospective financial instability. Furthermore, acquisitions during times of high economic policy uncertainty are associated with a rise in shareholders' wealth for acquirers, and this wealth effect is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by buying undervalued target companies.

GCC governments actively promote mergers and acquisitions through incentives such as for instance taxation breaks and regulatory approval as a way to solidify industries and develop local businesses to be have the capacity to competing at an a global level, as would Amin Nasser likely tell you. The need for financial diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working seriously to attract FDI by developing a favourable environment and increasing the ease of doing business for international investors. This strategy is not merely directed to attract foreign investors simply because they will add to economic growth but, more crucially, to enable M&A deals, which in turn will play an important part in allowing GCC-based companies to get access to international markets and transfer technology and expertise.