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 mostly driven by economic diversification and market expansion.

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 in the GCC countries face different problems, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nevertheless, once they acquire regional companies or merge with local enterprises, they gain instant access to regional knowledge and learn from their local partners. The most prominent examples of effective acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce company recognised being a strong competitor. But, the purchase not only removed local competition but also offered valuable local insights, a client base, plus an already founded convenient infrastructure. Additionally, another notable instance could be the purchase of an Arab super app, specifically a ridesharing company, by an international ride-hailing services provider. The international business obtained a well-established brand name with a large user base and extensive knowledge of the local transport market and consumer choices through the purchase.

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 takeovers during periods of high economic policy uncertainty, which contradicts the behaviour of Western firms. For example, big Arab finance institutions secured takeovers throughout the 2008 crises. Moreover, 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 far more cautious regarding takeovers compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems from the imperative to preserve national interest and mitigate prospective financial instability. Moreover, takeovers during times of high economic policy uncertainty are related to an increase in shareholders' wealth for acquirers, and this wealth effect is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by capturing undervalued target businesses.

GCC governments actively promote mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a means to solidify companies and build up regional businesses to become capable of contending on a international level, as would Amin Nasser likely inform you. The need for economic diversification and market expansion drives a lot of the M&A deals in the GCC. GCC countries are working seriously to draw in FDI by making a favourable ecosystem and increasing the ease of doing business for foreign investors. This strategy is not merely directed to attract foreign investors simply because they will add to economic growth but, more crucially, to facilitate M&A transactions, which in turn will play a substantial part in allowing GCC-based companies to gain access to international markets and transfer technology and expertise.