Exactly why M&As in GCC countries are encouraged

Exactly why M&As in GCC countries are encouraged

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 tax breaks and regulatory approval as a way to solidify companies and develop local companies to be effective at contending at an a worldwide level, as would Amin Nasser likely let you know. The necessity for financial diversification and market expansion drives a lot of the M&A deals into the GCC. GCC countries are working seriously to attract FDI by creating a favourable environment and increasing the ease of doing business for foreign 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 role in allowing GCC-based companies to gain 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 authors found that Arab Gulf firms are more likely to make acquisitions during periods of high economic policy uncertainty, which contradicts the behaviour of Western firms. For example, large Arab financial institutions secured acquisitions during the 2008 crises. Furthermore, the analysis shows that state-owned enterprises are more unlikely than non-SOEs to make acquisitions during times of high economic policy uncertainty. The the findings suggest that SOEs tend to be more cautious regarding acquisitions in comparison with their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, emanates from the imperative to preserve national interest and mitigate prospective financial uncertainty. Furthermore, takeovers during periods of high economic policy uncertainty are associated with an increase in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Indeed, this wealth effect highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by capturing undervalued target companies.

Strategic mergers and acquisitions have emerged as a way to tackle obstacles international businesses encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their reach into the GCC countries face different challenges, such as cultural distinctions, unknown regulatory frameworks, and market competition. Nevertheless, when they buy regional businesses or merge with regional enterprises, they gain instant use of local knowledge and learn from their regional partners. One of 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, which the giant e-commerce corporation recognised as being a strong competitor. Nevertheless, the purchase not merely eliminated regional competition but in addition offered valuable regional insights, a client base, and an already founded convenient infrastructure. Also, another notable example is the purchase of an Arab super app, particularly a ridesharing business, by an worldwide ride-hailing services provider. The multinational corporation gained a well-established brand with a big user base and substantial knowledge of the area transportation market and consumer choices through the acquisition.