Successful M&A Middle East mergers and partnerships

Successful M&A Middle East mergers and partnerships

Blog Article

International companies wanting to enter GCC markets can overcome regional challenges through M&A activities.

In a recently available study that investigates 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 periods of high economic policy uncertainty, which contradicts the behaviour of Western firms. For example, big Arab finance institutions secured takeovers throughout the 2008 crises. Moreover, the research shows that state-owned enterprises are less likely than non-SOEs to create acquisitions during times of high economic policy uncertainty. The the findings suggest that SOEs tend to be more prudent regarding acquisitions when compared 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 potential financial instability. Moreover, takeovers during times of high economic policy uncertainty are related to an increase in shareholders' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth effect highlights the potential for SOEs just like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by buying undervalued target businesses.

Strategic mergers and acquisitions are seen as a way to overcome hurdles international businesses encounter in Arab Gulf countries and emerging markets. Companies wanting to enter and grow their reach in the GCC countries face different problems, such as for instance cultural differences, unknown regulatory frameworks, and market competition. Nonetheless, when they buy regional businesses or merge with local enterprises, they gain instant access to regional knowledge and learn from their local partner's sucess. The most prominent examples of effective acquisitions in GCC markets is when a giant international e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce corporation recognised as being a strong competitor. However, the purchase not only removed regional competition but also offered valuable regional insights, a client base, and an already founded convenient infrastructure. Also, another notable example is the purchase of a Arab super app, particularly a ridesharing company, by an worldwide ride-hailing services provider. The multinational firm obtained a well-established manufacturer having a big user base and substantial knowledge of the area transportation market and consumer preferences through the purchase.

GCC governments actively promote mergers and acquisitions through incentives such as for instance taxation breaks and regulatory approval as a way to solidify companies and build regional companies to become capable of compete on a worldwide scale, as would Amin Nasser likely let you know. The need for economic diversification and market expansion drives much of the M&A transactions in the GCC. GCC countries are working seriously to draw in FDI by developing a favourable environment and increasing the ease of doing business for international investors. This plan is not only 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 significant role in enabling GCC-based companies to gain access to international markets and transfer technology and expertise.