Why M&As in GCC countries are recommended

Why M&As in GCC countries are recommended

Blog Article

Strategic alliances and acquisitions are effective strategies for international businesses looking to expand their operations within the Arab Gulf.

In a recently available study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers found that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western firms. For instance, big Arab financial institutions secured takeovers during the financial crises. Furthermore, the research suggests that state-owned enterprises are less likely than non-SOEs in order to make acquisitions during times of high economic policy uncertainty. The the findings indicate that SOEs tend to be more cautious regarding acquisitions when comparing to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems from the imperative to protect national interest and mitigate prospective financial uncertainty. Moreover, takeovers during times of high economic policy uncertainty are associated with an increase in investors' wealth for acquirers, and this wealth impact is more pronounced for SOEs. Indeed, this wealth impact highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by buying undervalued target businesses.

GCC governments actively encourage mergers and acquisitions through incentives such as for instance taxation breaks and regulatory approval as a method to consolidate industries and build regional businesses to become capable of contending at an a international scale, as would Amin Nasser likely let you know. The need for financial diversification and market expansion drives a lot of the M&A deals into the GCC. GCC countries are working seriously to attract FDI by developing a favourable environment and increasing the ease of doing business for foreign investors. This plan is not merely directed to attract international investors since they will add to economic growth but, more most importantly, to enable M&A deals, which in turn will play a substantial part in allowing GCC-based businesses to gain access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions are seen as a way to overcome obstacles worldwide companies encounter in Arab Gulf countries and emerging markets. Businesses planning to enter and grow their reach into the GCC countries face different difficulties, such as for instance cultural distinctions, unknown regulatory frameworks, and market competition. Nonetheless, if they buy regional businesses or merge with regional enterprises, they gain immediate access to local knowledge and learn from their regional partner's sucess. One of the more prominent cases of effective acquisitions in GCC markets is when a heavyweight international e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce corporation recognised as a strong contender. However, the purchase not merely removed local competition but additionally offered valuable local insights, a client base, and an already established convenient infrastructure. Furthermore, another notable example could be the acquisition of a Arab super software, specifically a ridesharing company, by an international ride-hailing services provider. The international company gained a well-established brand with a big user base and considerable understanding of the local transportation market and customer choices through the purchase.