Famous M&A Middle East mergers and acquisitions

Famous M&A Middle East mergers and acquisitions

Blog Article

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

GCC governments actively encourage mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a method to consolidate companies and build regional companies to become effective at compete on a worldwide scale, as would Amin Nasser likely let you know. The need for financial diversification and market expansion drives much of the M&A transactions into the GCC. GCC countries are working earnestly to bring in FDI by developing a favourable ecosystem and increasing the ease of doing business for international investors. This strategy is not only directed to attract international investors simply because they will add to economic growth but, more crucially, to enable M&A transactions, which in turn will play an important part in allowing GCC-based businesses to gain access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions are seen as a way to tackle obstacles worldwide companies face in Arab Gulf countries and emerging markets. Businesses planning to enter and expand their reach in the GCC countries face various problems, such as cultural differences, unknown regulatory frameworks, and market competition. However, once they buy local businesses or merge with local enterprises, they gain instant use of regional knowledge and learn from their regional partners. 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, that the giant e-commerce corporation recognised being a strong rival. However, the acquisition not merely removed local competition but additionally provided valuable regional insights, a customer base, as well as an already founded convenient infrastructure. Additionally, another notable example may be the purchase of an Arab super software, namely a ridesharing company, by the worldwide ride-hailing services provider. The multinational business gained a well-established manufacturer by having a large user base and extensive understanding of the area transport market and customer preferences through the acquisition.

In a recently available study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers found that Arab Gulf firms are more likely to make acquisitions during periods of high economic policy uncertainty, which contradicts the behaviour of Western companies. As an example, big Arab finance institutions secured acquisitions during the financial crises. Moreover, the research demonstrates that state-owned enterprises are more unlikely than non-SOEs in order to make acquisitions during periods of high economic policy uncertainty. The results indicate that SOEs are more prudent regarding acquisitions in comparison with their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to protect national interest and minimising prospective financial uncertainty. Furthermore, acquisitions during periods of high economic policy uncertainty are related to 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 such times by buying undervalued target businesses.