Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

Strategic alliances and acquisitions provide businesses with many perks when entering unfamiliar markets.

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 up local businesses to become capable of competing on a global scale, as would Amin Nasser likely let you know. The necessity for financial diversification and market expansion drives a lot of the M&A deals into the GCC. GCC countries are working earnestly to entice FDI by developing a favourable ecosystem and increasing the ease of doing business for international investors. This plan is not merely directed to attract international investors because they will contribute to economic growth but, more critically, 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 recent study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more likely to make acquisitions during periods of high economic policy uncertainty, which contradicts the behaviour of Western firms. For example, large Arab financial institutions secured acquisitions through the 2008 crises. Additionally, the analysis shows that state-owned enterprises are not as likely than non-SOEs to produce acquisitions during periods of high economic policy uncertainty. The results indicate that SOEs are more cautious regarding takeovers when comparing to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, stems from the imperative to protect national interest and minimising potential financial instability. Moreover, acquisitions during times of high economic policy uncertainty are connected with a rise in investors' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Indeed, this wealth impact highlights the potential for SOEs just like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by capturing undervalued target companies.

Strategic mergers and acquisitions are seen as a way to tackle hurdles worldwide companies encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their presence in the GCC countries face different difficulties, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. Nevertheless, once they acquire local companies or merge with local enterprises, they gain immediate access to regional knowledge and study their local partners. The most prominent cases of successful acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce corporation recognised as a strong contender. However, the purchase not only removed regional competition but also provided valuable local insights, a client base, plus an already founded convenient infrastructure. Moreover, another notable example may be the acquisition of a Arab super app, specifically a ridesharing company, by the international ride-hailing services provider. The international firm obtained a well-established manufacturer with a big user base and considerable familiarity with the local transport market and customer preferences through the purchase.