Successful M&A Middle East mergers and partnerships

Successful M&A Middle East mergers and partnerships

Blog Article

Foreign companies planning to enter GCC markets can overcome regional challenges through M&A transactions.

Strategic mergers and acquisitions have emerged as a way to tackle obstacles international businesses encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their presence in the GCC countries face different difficulties, such as for instance cultural differences, unfamiliar regulatory frameworks, and market competition. However, if they buy local businesses or merge with regional enterprises, they gain instant use of local knowledge and learn from their regional partner's sucess. The most prominent examples of effective acquisitions in GCC markets is when a heavyweight international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce firm recognised being a strong contender. But, the purchase not only eliminated regional competition but additionally offered valuable regional insights, a client base, as well as an already established convenient infrastructure. Additionally, another notable instance is the acquisition of a Arab super application, namely a ridesharing business, by an international ride-hailing services provider. The international business obtained a well-established manufacturer having a large user base and considerable familiarity with the local transportation market and consumer choices through the acquisition.

In recently published study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers discovered that Arab Gulf firms are more likely to make takeovers during periods of high economic policy uncertainty, which contradicts the conduct of Western companies. For example, big Arab banking institutions secured takeovers throughout the financial crises. Also, the study suggests that state-owned enterprises are not as likely than non-SOEs to create takeovers during periods of high economic policy uncertainty. The the findings indicate that SOEs are far more prudent regarding takeovers in comparison with their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems from the imperative to preserve national interest and minimising potential financial instability. Furthermore, acquisitions during times of high economic policy uncertainty are related to a rise in shareholders' wealth for acquirers, and this wealth impact is more pronounced for SOEs. Certainly, this wealth impact highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by capturing undervalued target businesses.

GCC governments actively promote mergers and acquisitions through incentives such as for instance taxation breaks and regulatory approval as a means to solidify industries and develop local businesses to become effective at compete on a international level, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives much of the M&A transactions into the GCC. GCC countries are working earnestly to invite FDI by creating a favourable environment and bettering the ease of doing business for international investors. This strategy is not merely directed to attract foreign investors simply because they will add to economic growth but, more crucially, to enable M&A deals, which in turn will play a significant role in enabling GCC-based companies to achieve access to international markets and transfer technology and expertise.