Exactly why M&As in GCC countries are encouraged

Exactly why M&As in GCC countries are encouraged

Blog Article

Strategic alliances and acquisitions are effective approaches for international companies aiming to expand their operations in the Arab Gulf.

In a recently available study that examines the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers discovered that Arab Gulf firms are more likely to make acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western companies. For instance, large Arab finance institutions secured takeovers throughout the financial crises. Additionally, the analysis demonstrates that state-owned enterprises are less likely than non-SOEs to create acquisitions during times of high economic policy uncertainty. The the findings indicate that SOEs are more cautious regarding takeovers in comparison to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, emanates from the imperative to protect national interest and minimising potential financial uncertainty. Furthermore, acquisitions during times of high economic policy uncertainty are related to an increase in investors' wealth for acquirers, and this wealth impact is more pronounced for SOEs. Certainly, 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 capturing undervalued target businesses.

Strategic mergers and acquisitions are seen as a way to overcome hurdles international companies encounter in Arab Gulf countries and emerging markets. Companies wanting to enter and grow their presence in the GCC countries face different difficulties, such as cultural distinctions, unfamiliar regulatory frameworks, and market competition. However, if they acquire local companies or merge with local enterprises, they gain immediate access to regional knowledge and learn from their regional partners. One of the most prominent cases of successful acquisitions in GCC markets is when a heavyweight international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce company recognised as a strong rival. Nevertheless, the purchase not only eliminated regional competition but additionally provided valuable local insights, a client base, and an already founded convenient infrastructure. Furthermore, another notable example could be the acquisition of a Arab super app, particularly a ridesharing company, by the worldwide ride-hailing services provider. The multinational firm obtained a well-established brand by having a large user base and considerable knowledge of the area transportation market and client choices through the acquisition.

GCC governments actively encourage mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a method to solidify industries and develop regional companies to become have the capacity to competing at an a worldwide scale, as would Amin Nasser likely tell you. The need for financial diversification and market expansion drives a lot of the M&A activities in the GCC. GCC countries are working seriously to bring in FDI by creating a favourable environment and bettering the ease of doing business for foreign investors. This strategy is not only directed to attract international investors because they will contribute to economic growth but, more most importantly, to facilitate M&A transactions, which in turn will play an important part in allowing GCC-based companies to achieve access to international markets and transfer technology and expertise.