On successful corporate strategies in the the Arabian Gulf

On successful corporate strategies in the the Arabian Gulf

Blog Article

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

In a recent study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers found that Arab Gulf firms are more inclined to make takeovers during periods of high economic policy uncertainty, which contradicts the behaviour of Western businesses. For instance, large Arab financial institutions secured takeovers throughout the financial crises. Furthermore, the analysis demonstrates that state-owned enterprises are less likely than non-SOEs to make takeovers during periods 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, according to this paper, emanates from the imperative to protect national interest and mitigate prospective financial uncertainty. Furthermore, acquisitions during times of high economic policy uncertainty are associated with an increase in investors' wealth for acquirers, and this wealth effect is more noticable 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 such times by capturing undervalued target businesses.

Strategic mergers and acquisitions are seen as a way to overcome hurdles international companies face in Arab Gulf countries and emerging markets. Businesses planning to enter and expand their reach into the GCC countries face various problems, such as for instance cultural distinctions, unfamiliar regulatory frameworks, and market competition. However, if they buy local companies or merge with local enterprises, they gain instant use of local knowledge and study their local partner's sucess. One of the most prominent cases of successful 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 contender. Nonetheless, the purchase not only removed local competition but in addition offered valuable regional insights, a client base, as well as an already founded convenient infrastructure. Moreover, another notable instance is the acquisition of a Arab super app, particularly a ridesharing company, by the worldwide ride-hailing services provider. The multinational firm obtained a well-established manufacturer with a large user base and considerable knowledge of the local transport market and customer preferences through the purchase.

GCC governments actively encourage mergers and acquisitions through incentives such as for instance taxation breaks and regulatory approval as a method to consolidate industries and develop local companies to become have the capacity to competing on a worldwide level, as would Amin Nasser likely inform you. The need for economic diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working earnestly to draw in FDI by making a favourable environment and increasing the ease of doing business for international investors. This strategy is not only directed to attract international investors because they will contribute to economic growth but, more critically, to enable M&A transactions, which in turn will play a significant role in enabling GCC-based businesses to gain access to international markets and transfer technology and expertise.