On effective corporate strategies in the the Arabian Gulf

On effective corporate strategies in the the Arabian Gulf

Blog Article

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

GCC governments actively promote mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a means to solidify companies and build up local companies to be effective at compete at an a global scale, as would Amin Nasser likely let you know. The necessity for financial diversification and market expansion drives a lot of the M&A activities in the GCC. GCC countries are working earnestly to entice FDI by developing a favourable ecosystem and bettering the ease of doing business for international investors. This plan is not merely directed to attract international investors since they will add to economic growth but, more most importantly, to enable M&A deals, which in turn will play a substantial part in enabling GCC-based businesses to get access to international markets and transfer technology and expertise.

In a recent study that examines 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 periods of high economic policy uncertainty, which contradicts the behaviour of Western companies. For instance, big Arab banking institutions secured takeovers through the 2008 crises. Furthermore, the study shows that state-owned enterprises are less likely than non-SOEs to produce takeovers during times of high economic policy uncertainty. The the findings suggest that SOEs are far more cautious regarding takeovers when compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to preserve national interest and mitigate potential financial instability. Furthermore, takeovers during times of high economic policy uncertainty are connected with a rise in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs just like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by buying undervalued target companies.

Strategic mergers and acquisitions are seen as a way to overcome obstacles international businesses encounter in Arab Gulf countries and emerging markets. Businesses planning to enter and grow their presence within the GCC countries face various challenges, such as cultural distinctions, unknown regulatory frameworks, and market competition. But, if they buy local businesses or merge with regional enterprises, they gain instant usage of regional knowledge and study their local partners. One of the most prominent cases of effective acquisitions in GCC markets is when a giant international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce company recognised being a strong competitor. But, the acquisition not merely removed local competition but also offered valuable regional insights, a customer base, and an already founded convenient infrastructure. Also, another notable example is the purchase of an Arab super app, particularly a ridesharing company, by the worldwide ride-hailing services provider. The multinational firm obtained a well-established brand name having a large user base and considerable familiarity with the local transportation market and client preferences through the purchase.