Famous M&A Middle East mergers and acquisitions

Famous M&A Middle East mergers and acquisitions

Blog Article

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

GCC governments actively encourage mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a method to solidify industries and develop local businesses to be have the capacity to contending on a international scale, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working seriously to invite FDI by creating a favourable ecosystem and bettering the ease of doing business for foreign investors. This plan is not only directed to attract international investors because they will add to economic growth but, more crucially, to enable M&A deals, which in turn will play an important part in allowing GCC-based businesses to achieve access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions have emerged as a way to overcome hurdles international businesses encounter in Arab Gulf countries and emerging markets. Companies attempting to enter and expand their presence into the GCC countries face various challenges, such as for example cultural differences, unknown regulatory frameworks, and market competition. However, once they buy local companies or merge with local enterprises, they gain immediate use of regional knowledge and learn from their regional partner's sucess. One of the most prominent cases of effective acquisitions in GCC markets is when a giant international e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce corporation recognised being a strong rival. Nevertheless, the purchase not merely eliminated local competition but in addition provided valuable local insights, a client base, plus an already established convenient infrastructure. Moreover, another notable instance could be the acquisition of an Arab super application, particularly a ridesharing company, by an worldwide ride-hailing services provider. The international corporation obtained a well-established manufacturer by having a big user base and considerable knowledge of the area transport market and consumer preferences through the acquisition.

In a recently available study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers discovered that Arab Gulf firms are more likely to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western businesses. For example, large Arab banking institutions secured takeovers through the 2008 crises. Additionally, the study shows that state-owned enterprises are more unlikely than non-SOEs in order to make takeovers during periods of high economic policy uncertainty. The the findings suggest that SOEs are far more prudent regarding acquisitions in comparison with their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, emanates from the imperative to protect national interest and mitigate potential financial instability. Furthermore, 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 effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by buying undervalued target businesses.