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 mainly driven by economic diversification and market expansion.

Strategic mergers and acquisitions have emerged as a way to overcome obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and grow their presence within the GCC countries face different challenges, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, when they acquire regional businesses or merge with regional enterprises, they gain instant access to local knowledge and study their local partners. One of the more prominent examples of effective acquisitions in GCC markets is when a heavyweight international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce firm recognised as a strong competitor. But, the acquisition not only removed regional competition but also provided valuable regional insights, a customer base, as well as an already founded convenient infrastructure. Additionally, another notable example may be the purchase of a Arab super app, specifically a ridesharing business, by the worldwide ride-hailing services provider. The multinational company gained a well-established manufacturer with a large user base and substantial understanding of the area transport market and consumer preferences through the purchase.

GCC governments actively promote mergers and acquisitions through incentives such as tax breaks and regulatory approval as a way to consolidate industries and build regional businesses to become have the capacity to competing on a global scale, as would Amin Nasser likely inform you. The necessity for financial diversification and market expansion drives a lot of the M&A transactions into the GCC. GCC countries are working seriously to draw in 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 enable M&A deals, which in turn will play a substantial part in enabling GCC-based businesses to get access to international markets and transfer technology and expertise.

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 acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western companies. As an example, big Arab banking institutions secured takeovers during the financial crises. Furthermore, the analysis suggests 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 tend to be more cautious regarding takeovers in comparison to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, emanates from the imperative to protect national interest and minimising prospective financial uncertainty. Furthermore, takeovers during periods of high economic policy uncertainty are associated with an increase in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Indeed, this wealth effect highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by capturing undervalued target companies.