Famous M&A Middle East mergers and acquisitions

Famous M&A Middle East mergers and acquisitions

Blog Article

Foreign companies planning to enter GCC markets can overcome local challenges through M&A activities.

GCC governments actively promote mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a method to solidify companies and build local businesses to be capable of compete at an a global level, as would Amin Nasser likely let you know. The need for financial diversification and market expansion drives a lot of the M&A activities into the GCC. GCC countries are working earnestly to entice FDI by creating a favourable ecosystem and increasing the ease of doing business for international investors. This strategy is not merely directed to attract international investors since they will contribute to economic growth but, more most importantly, to enable M&A transactions, which in turn will play a substantial role in enabling GCC-based companies to gain access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions have emerged as a way to overcome hurdles international companies face in Arab Gulf countries and emerging markets. Businesses wanting to enter and grow their presence into the GCC countries face various problems, such as for instance cultural differences, unfamiliar regulatory frameworks, and market competition. However, once they acquire regional companies or merge with regional enterprises, they gain instant use of regional knowledge and learn from their regional partners. One of the more prominent examples of effective acquisitions in GCC markets is when a giant worldwide e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce corporation recognised being a strong rival. Nevertheless, the purchase not only removed local competition but additionally provided valuable local insights, a client base, and an already founded convenient infrastructure. Moreover, another notable instance may be the purchase of an Arab super software, namely a ridesharing business, by the international ride-hailing services provider. The international corporation gained a well-established manufacturer with a big user base and extensive understanding of the local transportation market and consumer preferences through the acquisition.

In recently published study that examines the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western firms. For instance, big Arab financial institutions secured acquisitions throughout the 2008 crises. Furthermore, the research suggests that state-owned enterprises are less likely than non-SOEs to help make takeovers during periods of high economic policy uncertainty. The results indicate that SOEs are more prudent regarding takeovers compared to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to protect national interest and mitigate potential financial instability. Moreover, takeovers during times of high economic policy uncertainty are connected with 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 possibilities in similar times by capturing undervalued target companies.