Successful M&A Middle East mergers and alliances

Successful M&A Middle East mergers and alliances

Blog Article

Strategic alliances and acquisitions offer companies with many perks when entering unknown markets.

Strategic mergers and acquisitions are seen as a way to overcome obstacles international companies encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and grow their reach into the GCC countries face different problems, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. However, when they acquire local companies or merge with local enterprises, they gain instant usage of regional knowledge and study their regional partner's sucess. One of the more prominent cases of effective acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce company recognised being a strong competitor. Nonetheless, the acquisition not only eliminated local competition but also offered valuable regional insights, a client base, plus an already founded convenient infrastructure. Also, another notable instance may be the acquisition of an Arab super app, namely a ridesharing business, by the worldwide ride-hailing services provider. The international business obtained a well-established brand name with a large user base and extensive understanding of the local transportation market and customer choices through the purchase.

In a recently available study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors discovered that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western businesses. For instance, large Arab financial institutions secured takeovers through the financial crises. Moreover, the study suggests that state-owned enterprises are not as likely than non-SOEs to produce acquisitions during times of high economic policy uncertainty. The the findings indicate that SOEs are more cautious regarding acquisitions in comparison with their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems from the imperative to protect national interest and mitigate prospective financial uncertainty. Moreover, takeovers during periods of high economic policy uncertainty are associated with a rise in shareholders' wealth for acquirers, and this wealth effect is more noticable for SOEs. Indeed, this wealth effect highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by capturing undervalued target businesses.

GCC governments actively encourage mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a means to solidify industries and develop regional companies to become capable of compete at an a global level, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives a lot of the M&A activities into the GCC. GCC countries are working earnestly to bring in FDI by developing a favourable ecosystem and increasing the ease of doing business for international investors. This strategy is not merely directed to attract foreign investors since they will contribute to economic growth but, more most importantly, to facilitate M&A deals, which in turn will play an important part in allowing GCC-based businesses to gain access to international markets and transfer technology and expertise.