Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

Strategic alliances and acquisitions are effective strategies for multinational businesses planning to expand their presence within the Arab Gulf.

GCC governments actively promote mergers and acquisitions through incentives such as tax breaks and regulatory approval as a method to consolidate industries and build local companies to be effective at competing at an a worldwide scale, 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 earnestly to draw in FDI by creating a favourable environment and bettering the ease of doing business for international investors. This strategy is not only directed to attract international investors since they will add to economic growth but, more crucially, to enable M&A deals, which in turn will play a substantial role in allowing GCC-based companies to achieve access to international markets and transfer technology and expertise.

In recently published study that investigates the relationship 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. As an example, big Arab financial institutions secured acquisitions during the financial crises. Moreover, the research demonstrates that state-owned enterprises are more unlikely than non-SOEs to make acquisitions during periods of high economic policy uncertainty. The results indicate that SOEs tend to be more prudent regarding acquisitions in comparison to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, stems from the imperative to protect national interest and minimising prospective financial uncertainty. Furthermore, acquisitions during periods 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 effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by capturing undervalued target companies.

Strategic mergers and acquisitions are seen as a way to overcome obstacles international businesses face in Arab Gulf countries and emerging markets. Companies wanting to enter and grow their reach within the GCC countries face different problems, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. Nonetheless, once they acquire local companies or merge with local enterprises, they gain instant usage of regional knowledge and learn from their local partner's sucess. One of the more prominent cases 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 company recognised being a strong competitor. However, the acquisition not merely removed local competition but also offered valuable regional insights, a client base, as well as an already established convenient infrastructure. Furthermore, another notable instance could be the acquisition of an Arab super app, particularly a ridesharing business, by an international ride-hailing services provider. The international company obtained a well-established brand name by having a big user base and extensive knowledge of the area transport market and client preferences through the acquisition.