Successful M&A Middle East mergers and partnerships

Successful M&A Middle East mergers and partnerships

Blog Article

Strategic alliances and acquisitions are effective techniques for multinational companies aiming to expand their operations into the Arab Gulf.

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 have the capacity to competing on a international scale, as would Amin Nasser likely inform you. The need for economic diversification and market expansion drives much of the M&A activities in the GCC. GCC countries are working earnestly to invite FDI by making a favourable ecosystem and bettering the ease of doing business for international investors. This plan is not only directed to attract foreign investors because they will contribute to economic growth but, more crucially, to facilitate M&A transactions, which in turn will play an important role in permitting GCC-based businesses to get access to international markets and transfer technology and expertise.

In recently published study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers discovered that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western businesses. For example, big Arab finance institutions secured takeovers through the 2008 crises. Additionally, the analysis suggests that state-owned enterprises are more unlikely than non-SOEs in order to make takeovers during times of high economic policy uncertainty. The results suggest that SOEs are far 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 mitigate potential financial instability. Moreover, takeovers during times of high economic policy uncertainty are connected 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 like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by buying undervalued target businesses.

Strategic mergers and acquisitions are seen as a way to overcome hurdles worldwide businesses face in Arab Gulf countries and emerging markets. Companies planning to enter and grow their reach in the GCC countries face different difficulties, such as for instance cultural differences, unknown regulatory frameworks, and market competition. But, once they acquire local companies or merge with regional enterprises, they gain immediate access to regional knowledge and learn from their local partner's sucess. The most prominent examples of successful acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce firm recognised being a strong contender. However, the purchase not only eliminated regional competition but in addition offered valuable local insights, a customer base, and an already founded convenient infrastructure. Additionally, another notable example is the purchase of an Arab super app, specifically a ridesharing company, by the worldwide ride-hailing services provider. The multinational firm obtained a well-established brand name by having a large user base and extensive familiarity with the local transportation market and consumer choices through the acquisition.