Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

Mergers and acquisitions within the GCC are largely driven by economic diversification and market expansion.

In a recently available 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 takeovers during periods of high economic policy uncertainty, which contradicts the behaviour of Western businesses. For instance, large Arab finance institutions secured takeovers during the 2008 crises. Also, the research shows that state-owned enterprises are more unlikely than non-SOEs to help make acquisitions during times of high economic policy uncertainty. The the findings indicate that SOEs are far more cautious regarding acquisitions 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 minimising potential financial instability. Furthermore, takeovers during periods of high economic policy uncertainty are associated with a rise in investors' wealth for acquirers, and this wealth effect 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 companies.

Strategic mergers and acquisitions are seen as a way to tackle obstacles international companies face in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their reach within the GCC countries face various problems, such as for instance cultural differences, unknown regulatory frameworks, and market competition. But, when they buy local companies or merge with local enterprises, they gain immediate usage of local knowledge and study their regional partners. One of the more prominent examples of effective acquisitions in GCC markets is when a heavyweight international e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce firm recognised being a strong contender. Nonetheless, the acquisition not merely eliminated regional competition but additionally provided valuable local insights, a client base, as well as an already founded convenient infrastructure. Also, another notable example may be the acquisition of a Arab super app, particularly a ridesharing company, by the international ride-hailing services provider. The international corporation gained a well-established brand name by having a large user base and substantial knowledge of the area transportation market and client choices through the acquisition.

GCC governments actively promote mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a means to solidify companies and build regional companies to become capable of contending at an a global level, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives a lot of the M&A activities into the GCC. GCC countries are working seriously to invite FDI by making a favourable environment and bettering the ease of doing business for international investors. This strategy is not merely directed to attract foreign investors since they will add to economic growth but, more crucially, to facilitate M&A deals, which in turn will play a significant role in enabling GCC-based companies to achieve access to international markets and transfer technology and expertise.