Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

International businesses attempting to enter GCC markets can overcome local challenges through M&A transactions.

GCC governments actively encourage mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a method to solidify companies and build up local companies to be effective at contending at an a worldwide level, as would Amin Nasser likely let you know. The necessity for financial diversification and market expansion drives a lot of the M&A transactions into the GCC. GCC countries are working seriously to bring in FDI by making a favourable ecosystem and bettering the ease of doing business for international investors. This strategy is not only directed to attract foreign investors because they will contribute to economic growth but, more crucially, to facilitate M&A transactions, which in turn will play a significant role in allowing GCC-based companies to achieve 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 writers discovered that Arab Gulf firms are more inclined to make takeovers during periods of high economic policy uncertainty, which contradicts the behaviour of Western companies. For instance, large Arab financial institutions secured acquisitions during the financial crises. Moreover, the study shows that state-owned enterprises are not as likely than non-SOEs to help make takeovers during times of high economic policy uncertainty. The the findings suggest that SOEs are more prudent regarding acquisitions compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to preserve national interest and mitigate prospective financial uncertainty. Furthermore, takeovers during periods of high economic policy uncertainty are associated with an increase in shareholders' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by capturing undervalued target companies.

Strategic mergers and acquisitions are seen as a way to tackle hurdles international businesses encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their presence into the GCC countries face different difficulties, such as cultural distinctions, unknown regulatory frameworks, and market competition. Nevertheless, when they acquire regional companies or merge with local enterprises, they gain immediate access to regional knowledge and learn from their local partner's sucess. The most prominent examples of effective acquisitions in GCC markets is when a heavyweight international e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce company recognised as a strong rival. Nevertheless, the acquisition not merely eliminated local competition but in addition offered valuable regional insights, a client base, and an already founded convenient infrastructure. Also, another notable example could be the acquisition of a Arab super application, namely a ridesharing business, by an international ride-hailing services provider. The international business gained a well-established brand with a big user base and substantial knowledge of the area transport market and customer choices through the acquisition.