Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

Strategic alliances and acquisitions offer companies with several advantages when entering unknown markets.

Strategic mergers and acquisitions have emerged as a way to overcome obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Companies attempting to enter and expand their presence into the GCC countries face various problems, such as cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, when they acquire regional businesses or merge with local enterprises, they gain instant use of regional knowledge and learn from their regional partner's sucess. The most prominent cases of successful acquisitions in GCC markets is when a giant worldwide e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce firm recognised as a strong competitor. But, the acquisition not merely removed local competition but additionally provided valuable local insights, a customer base, plus an already established convenient infrastructure. Moreover, another notable instance is the acquisition of a Arab super software, namely a ridesharing company, by the international ride-hailing services provider. The multinational company gained a well-established brand name having a big user base and considerable knowledge of the area transport market and consumer preferences through the acquisition.

GCC governments actively promote mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a way to solidify companies and develop local companies to become have the capacity to competing on a international level, as would Amin Nasser likely tell you. The need for economic diversification and market expansion drives a lot of the M&A deals into the GCC. GCC countries are working seriously to attract FDI by creating a favourable environment and bettering the ease of doing business for international investors. This plan is not merely directed to attract international investors since 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 achieve 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 inclined 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 during the financial crises. Furthermore, the study shows that state-owned enterprises are less likely than non-SOEs to create acquisitions during periods of high economic policy uncertainty. The results indicate that SOEs are more prudent regarding takeovers when compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to protect national interest and minimising prospective financial uncertainty. Moreover, acquisitions 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. Certainly, this wealth effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by buying undervalued target companies.