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 mostly driven by economic diversification and market expansion.

In recently published study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors discovered that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western companies. For instance, large Arab finance institutions secured takeovers through the 2008 crises. Furthermore, the analysis shows that state-owned enterprises are less likely than non-SOEs in order to make takeovers during periods of high economic policy uncertainty. The the findings suggest that SOEs are more cautious regarding acquisitions when comparing to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to preserve national interest and minimising potential financial uncertainty. Moreover, takeovers during times of high economic policy uncertainty are related to a rise in shareholders' wealth for acquirers, and this wealth impact is more pronounced 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 possibilities in such times by buying undervalued target businesses.

Strategic mergers and acquisitions are seen as a way to tackle obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Companies planning to enter and expand their reach within the GCC countries face different challenges, such as for instance cultural differences, unknown regulatory frameworks, and market competition. Nevertheless, if they buy local companies or merge with regional enterprises, they gain instant access to regional knowledge and learn from their local partner's sucess. The most prominent cases of successful acquisitions in GCC markets is when a giant international e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce firm recognised as being a strong competitor. Nevertheless, the purchase not merely eliminated regional competition but additionally offered valuable local insights, a client base, and an already established convenient infrastructure. Furthermore, another notable instance is the purchase of an Arab super app, specifically a ridesharing company, by an international ride-hailing services provider. The multinational corporation obtained a well-established brand name with a large user base and substantial understanding of the area transport market and consumer preferences through the acquisition.

GCC governments actively promote mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a means to solidify companies and build up regional businesses to become effective at compete on a international level, as would Amin Nasser likely inform you. The need for economic diversification and market expansion drives a lot of the M&A transactions in the GCC. GCC countries are working seriously to invite FDI by making a favourable environment and increasing the ease of doing business for foreign investors. This plan is not merely directed to attract foreign investors because they will add to economic growth but, more most importantly, to enable M&A transactions, which in turn will play an important part in enabling GCC-based companies to gain access to international markets and transfer technology and expertise.