Exactly why M&As in GCC countries are recommended

Exactly why M&As in GCC countries are recommended

Blog Article

Mergers and acquisitions within the GCC are largely driven by economic diversification and market expansion.

In a recent study that examines the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers found that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the behaviour of Western firms. As an example, big Arab financial institutions secured takeovers through the financial crises. Furthermore, the analysis demonstrates that state-owned enterprises are not as likely than non-SOEs to create takeovers during times of high economic policy uncertainty. The results suggest that SOEs tend to be more prudent regarding takeovers in comparison 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 prospective financial instability. Furthermore, takeovers during periods of high economic policy uncertainty are connected with an increase in shareholders' wealth for acquirers, and this wealth impact is more pronounced for SOEs. Certainly, this wealth effect highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by capturing undervalued target businesses.

Strategic mergers and acquisitions are seen as a way to tackle obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Companies planning to enter and expand their reach within the GCC countries face various difficulties, such as cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, when they buy local companies or merge with regional enterprises, they gain instant access to regional knowledge and learn from their regional partner's sucess. The most prominent cases of successful acquisitions in GCC markets is when a heavyweight international e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce firm recognised as a strong rival. However, the purchase not only removed regional competition but additionally provided valuable local insights, a client base, plus an already established convenient infrastructure. Additionally, another notable example may be the acquisition of an Arab super software, namely a ridesharing business, by the international ride-hailing services provider. The international corporation obtained a well-established manufacturer with a big user base and considerable understanding of the area transportation market and client choices through the acquisition.

GCC governments actively encourage mergers and acquisitions through incentives such as for example taxation breaks and regulatory approval as a way to solidify companies and build up regional businesses to be effective at compete on a international level, as would Amin Nasser likely let you know. The necessity for financial diversification and market expansion drives much of the M&A transactions into the GCC. GCC countries are working seriously to entice FDI by developing a favourable ecosystem and increasing the ease of doing business for foreign investors. This strategy is not merely directed to attract international investors because they will contribute to economic growth but, more critically, to enable M&A deals, which in turn will play a significant role in permitting GCC-based businesses to get access to international markets and transfer technology and expertise.