On effective corporate strategies in the Arab gulf

On effective corporate strategies in the Arab gulf

Blog Article

Mergers and acquisitions in the GCC are mainly driven by economic diversification and market expansion.

GCC governments actively promote mergers and acquisitions through incentives such as tax breaks and regulatory approval as a method to consolidate industries and develop regional businesses to be capable of compete on a international scale, as would Amin Nasser likely inform you. The necessity for financial diversification and market expansion drives much of the M&A deals into the GCC. GCC countries are working seriously to draw in FDI by developing a favourable environment and increasing the ease of doing business for international investors. This plan is not only directed to attract international investors simply because they will contribute to economic growth but, more most importantly, to facilitate M&A deals, which in turn will play an important role in enabling GCC-based businesses to gain access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions have emerged as a way to overcome obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Businesses wanting to enter and grow their presence into the GCC countries face various challenges, such as for example cultural differences, unfamiliar regulatory frameworks, and market competition. Nonetheless, when they buy regional businesses or merge with local enterprises, they gain immediate usage of local knowledge and study their local 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 company recognised as being a strong contender. But, the acquisition not merely removed local competition but in addition offered valuable local insights, a client base, as well as an already established convenient infrastructure. Also, another notable example may be the purchase of an Arab super application, particularly a ridesharing company, by the worldwide ride-hailing services provider. The multinational company gained a well-established manufacturer with a big user base and considerable knowledge of the local transport market and consumer choices 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 inclined to make acquisitions during times of high economic policy uncertainty, which contradicts the behaviour of Western companies. As an example, large Arab banking institutions secured takeovers through the financial crises. Also, the analysis shows that state-owned enterprises are more unlikely than non-SOEs to help make takeovers during periods of high economic policy uncertainty. The results indicate that SOEs are far more prudent regarding acquisitions when comparing to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems from the imperative to protect national interest and minimising prospective financial instability. Moreover, takeovers during times of high economic policy uncertainty are associated with an increase in shareholders' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by capturing undervalued target companies.