Successful M&A Middle East mergers and partnerships

Successful M&A Middle East mergers and partnerships

Blog Article

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

GCC governments actively encourage mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a way to consolidate companies and build regional businesses to be have the capacity to contending on a worldwide scale, as would Amin Nasser likely inform you. The necessity for economic diversification and market expansion drives a lot of the M&A activities into the GCC. GCC countries are working earnestly to attract FDI by making a favourable environment and bettering the ease of doing business for foreign investors. This plan is not merely directed to attract foreign investors simply because they will contribute to economic growth but, more most importantly, to facilitate 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.

Strategic mergers and acquisitions are seen as a way to overcome obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Companies attempting to enter and expand their reach in the GCC countries face different challenges, such as for example cultural differences, unknown regulatory frameworks, and market competition. However, if they acquire regional businesses or merge with regional enterprises, they gain instant use of regional knowledge and learn from their regional partners. The most prominent cases of successful acquisitions in GCC markets is when a heavyweight international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce corporation recognised as being a strong contender. Nonetheless, the purchase not only removed local competition but additionally provided valuable local insights, a customer base, plus an already established convenient infrastructure. Also, another notable instance may be the purchase of an Arab super application, namely a ridesharing company, by an worldwide ride-hailing services provider. The multinational business gained a well-established brand name having a big user base and extensive understanding of the area transport 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 researchers found that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western firms. For instance, big Arab finance institutions secured acquisitions throughout the 2008 crises. Additionally, the study shows that state-owned enterprises are not as likely than non-SOEs in order to make acquisitions during periods of high economic policy uncertainty. The results suggest that SOEs are far more cautious regarding acquisitions compared to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to protect national interest and minimising prospective financial instability. Moreover, acquisitions during periods of high economic policy uncertainty are related to a rise in investors' wealth for acquirers, and this wealth impact 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 opportunities in such times by capturing undervalued target companies.