Successful M&A Middle East mergers and partnerships

Successful M&A Middle East mergers and partnerships

Blog Article

Strategic alliances and acquisitions offer businesses with many perks when entering unfamiliar markets.

Strategic mergers and acquisitions have emerged as a way to overcome hurdles international businesses encounter in Arab Gulf countries and emerging markets. Companies planning to enter and expand their reach in the GCC countries face different problems, such as for instance cultural distinctions, unknown regulatory frameworks, and market competition. Nonetheless, when they buy regional businesses or merge with local enterprises, they gain immediate usage of local knowledge and study their local partners. One of the more prominent examples of effective acquisitions in GCC markets is when a giant worldwide e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce firm recognised being a strong rival. However, the purchase not merely eliminated local competition but additionally provided valuable regional insights, a customer base, as well as an already founded convenient infrastructure. Moreover, another notable example could be the acquisition of a Arab super software, specifically a ridesharing company, by an worldwide ride-hailing services provider. The multinational firm obtained a well-established brand name by having a big user base and substantial knowledge of the area transport market and customer choices through the acquisition.

GCC governments actively promote mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a method to consolidate companies and build up local businesses to be effective at competing at an a global level, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives much of the M&A transactions into the GCC. GCC countries are working earnestly to draw in FDI by developing a favourable ecosystem and increasing the ease of doing business for international 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 deals, which in turn will play a significant role in permitting GCC-based businesses to gain access to international markets and transfer technology and expertise.

In a recently available study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more likely to make acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western businesses. For example, big Arab finance institutions secured takeovers through the financial crises. Also, the analysis shows that state-owned enterprises are less likely than non-SOEs to produce takeovers during times of high economic policy uncertainty. The the findings indicate that SOEs tend to be more cautious regarding acquisitions compared to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to preserve national interest and mitigate potential financial uncertainty. Moreover, acquisitions during times of high economic policy uncertainty are related to an increase in shareholders' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Indeed, this wealth impact highlights the potential for SOEs just like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by capturing undervalued target companies.