Famous M&A Middle East mergers and acquisitions

Famous M&A Middle East mergers and acquisitions

Blog Article

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

GCC governments actively encourage mergers and acquisitions through incentives such as for example taxation breaks and regulatory approval as a method to consolidate industries and build regional businesses to become capable of contending at an a international scale, as would Amin Nasser likely inform you. 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 invite FDI by developing a favourable ecosystem and increasing the ease of doing business for international investors. This strategy is not only directed to attract foreign investors since they will add to economic growth but, more most importantly, to enable M&A deals, which in turn will play an important part in permitting GCC-based companies to achieve access to international markets and transfer technology and expertise.

In a recently available study that examines the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more inclined to make takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western companies. For example, large Arab financial institutions secured takeovers through the 2008 crises. Moreover, the study shows that state-owned enterprises are less likely than non-SOEs to make acquisitions during periods of high economic policy uncertainty. The results suggest that SOEs tend to be more prudent regarding acquisitions compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to protect national interest and mitigate potential financial uncertainty. Furthermore, acquisitions during periods of high economic policy uncertainty are connected with a rise in shareholders' wealth for acquirers, and this wealth effect is more noticable for SOEs. Certainly, 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.

Strategic mergers and acquisitions are seen as a way to overcome hurdles worldwide businesses encounter in Arab Gulf countries and emerging markets. Businesses wanting to enter and expand their reach within the GCC countries face various problems, such as for instance cultural differences, unknown regulatory frameworks, and market competition. Nevertheless, when they buy local companies or merge with local enterprises, they gain immediate access to regional knowledge and learn from their regional partner's sucess. The most prominent cases of effective acquisitions in GCC markets is when a giant worldwide e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce company recognised as a strong rival. Nevertheless, the purchase not only eliminated regional competition but additionally offered valuable regional insights, a customer base, plus an already founded convenient infrastructure. Moreover, another notable instance may be the purchase of an Arab super app, particularly a ridesharing company, by the international ride-hailing services provider. The international company gained a well-established manufacturer with a big user base and substantial familiarity with the local transport market and client preferences through the purchase.