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 local challenges through M&A transactions.

In a recent study that examines the connection 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 companies. For instance, big Arab finance institutions secured acquisitions throughout the 2008 crises. Also, the research suggests that state-owned enterprises are less likely than non-SOEs to help make acquisitions during times of high economic policy uncertainty. The results suggest that SOEs are more prudent regarding takeovers in comparison with their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to protect national interest and mitigate potential financial uncertainty. Furthermore, acquisitions during periods of high economic policy uncertainty are connected with a rise in shareholders' wealth for acquirers, and this wealth impact is more pronounced for SOEs. Certainly, this wealth effect highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by capturing undervalued target businesses.

GCC governments actively promote mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a means to consolidate companies and build up local businesses to become have the capacity to competing on a international level, as would Amin Nasser likely tell you. The necessity for financial diversification and market expansion drives much of the M&A transactions in the GCC. GCC countries are working seriously to entice FDI by making a favourable environment and increasing the ease of doing business for foreign investors. This strategy is not only directed to attract international investors since they will add to economic growth but, more most importantly, to enable M&A transactions, which in turn will play an important role in enabling GCC-based businesses to get access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions have emerged as a way to tackle obstacles international businesses face in Arab Gulf countries and emerging markets. Companies wanting to enter and expand their presence within the GCC countries face different challenges, such as for instance cultural distinctions, unknown regulatory frameworks, and market competition. But, if they buy regional companies or merge with regional enterprises, they gain instant use of regional knowledge and study their regional partners. The most prominent examples 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 company recognised as a strong contender. However, the purchase not merely removed regional competition but in addition provided valuable local insights, a client base, as well as an already founded convenient infrastructure. Furthermore, another notable instance could be the purchase of an Arab super app, namely a ridesharing company, by an international ride-hailing services provider. The international firm gained a well-established brand with a large user base and considerable familiarity with the area transport market and client choices through the acquisition.