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 mostly driven by economic diversification and market expansion.

In a recent 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 likely to make acquisitions during times of high economic policy uncertainty, which contradicts the behaviour of Western firms. For instance, big Arab financial institutions secured takeovers through the financial crises. Moreover, the analysis shows that state-owned enterprises are less likely than non-SOEs to help make takeovers during times of high economic policy uncertainty. The results indicate that SOEs tend to be more cautious regarding takeovers 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 potential financial uncertainty. Furthermore, takeovers during times of high economic policy uncertainty are connected with 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 people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by buying undervalued target businesses.

GCC governments actively promote mergers and acquisitions through incentives such as for example taxation breaks and regulatory approval as a method to solidify companies and develop regional businesses to become have the capacity to competing on a global scale, as would Amin Nasser likely let you know. The necessity for financial diversification and market expansion drives much of the M&A deals into the GCC. GCC countries are working seriously to attract FDI by creating a favourable environment and bettering the ease of doing business for international investors. This plan is not merely directed to attract foreign investors since they will add to economic growth but, more crucially, to enable M&A deals, which in turn will play an important role in allowing GCC-based companies to get access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions are seen as a way to overcome obstacles worldwide companies encounter in Arab Gulf countries and emerging markets. Companies wanting to enter and grow their reach into the GCC countries face various problems, such as cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, once they acquire local companies or merge with local enterprises, they gain immediate access to regional knowledge and study their local partners. One of the more prominent cases of effective acquisitions in GCC markets is when a giant worldwide e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce corporation recognised as a strong rival. But, the purchase not only eliminated local competition but in addition provided valuable local insights, a client base, plus an already established convenient infrastructure. Moreover, another notable example is the purchase of a Arab super application, namely a ridesharing business, by an international ride-hailing services provider. The international firm gained a well-established brand with a big user base and substantial knowledge of the area transport market and client choices through the purchase.