Successful M&A Middle East mergers and partnerships

Successful M&A Middle East mergers and partnerships

Blog Article

Mergers and acquisitions in the GCC are mainly driven by economic diversification and market expansion.

Strategic mergers and acquisitions have emerged as a way to overcome obstacles worldwide companies face in Arab Gulf countries and emerging markets. Companies planning to enter and expand their presence into the GCC countries face different challenges, such as cultural differences, unfamiliar regulatory frameworks, and market competition. However, when they acquire local companies or merge with local enterprises, they gain instant usage of regional knowledge and study their regional partner's sucess. The most prominent examples of successful acquisitions in GCC markets is when a giant international e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce firm recognised as being a strong rival. Nonetheless, the purchase not only eliminated local competition but in addition provided valuable regional insights, a client base, as well as an already established convenient infrastructure. Furthermore, another notable example could be the purchase of an Arab super app, namely a ridesharing company, by an worldwide ride-hailing services provider. The international company obtained a well-established brand name with a big user base and considerable familiarity with the area transportation market and customer choices through the purchase.

In a recently available study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors discovered that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western businesses. For instance, large Arab financial institutions secured acquisitions through the financial crises. Furthermore, the analysis suggests that state-owned enterprises are not as likely than non-SOEs to create acquisitions during times of high economic policy uncertainty. The results indicate that SOEs are far more cautious regarding acquisitions when compared to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, emanates from the imperative to preserve national interest and minimising potential financial instability. Furthermore, takeovers 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. Indeed, this wealth impact highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by buying undervalued target businesses.

GCC governments actively encourage mergers and acquisitions through incentives such as tax breaks and regulatory approval as a way to consolidate companies and build up regional companies to become effective at compete on a global level, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working seriously to invite FDI by creating a favourable ecosystem and bettering the ease of doing business for foreign investors. This plan is not only directed to attract international investors because they will add to economic growth but, more crucially, to enable M&A transactions, which in turn will play a substantial role in enabling GCC-based companies to get access to international markets and transfer technology and expertise.