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 largely driven by economic diversification and market expansion.

Strategic mergers and acquisitions have emerged as a way to tackle hurdles worldwide companies face in Arab Gulf countries and emerging markets. Businesses attempting to enter and grow their reach into the GCC countries face different problems, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. Nonetheless, once they buy local companies or merge with regional enterprises, they gain immediate access to local knowledge and study their local partners. One of the most prominent examples 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 company recognised as a strong competitor. Nevertheless, the acquisition not only removed local competition but in addition provided valuable local insights, a customer base, and an already founded convenient infrastructure. Furthermore, another notable instance could be the purchase of an Arab super software, specifically a ridesharing business, by an worldwide ride-hailing services provider. The international corporation gained a well-established brand name having a large user base and considerable understanding of the area transportation market and consumer preferences through the purchase.

In a recent study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers found that Arab Gulf firms are more inclined to make takeovers during periods of high economic policy uncertainty, which contradicts the behaviour of Western companies. As an example, large Arab finance institutions secured acquisitions throughout the 2008 crises. Moreover, the analysis suggests that state-owned enterprises are not as likely than non-SOEs to produce acquisitions during times of high economic policy uncertainty. The results suggest that SOEs tend to be more prudent regarding takeovers in comparison to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, emanates from the imperative to protect national interest and minimising potential financial uncertainty. Moreover, takeovers during times of high economic policy uncertainty are associated with a rise in investors' wealth for acquirers, and this wealth effect is more noticable for SOEs. Indeed, this wealth impact 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 companies.

GCC governments actively promote mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a way to consolidate companies and build up regional companies to be effective at competing at an a international level, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives a lot of the M&A transactions into the GCC. GCC countries are working earnestly to attract FDI by developing a favourable ecosystem and increasing the ease of doing business for international investors. This strategy is not merely directed to attract international investors simply because they will add to economic growth but, more critically, to enable M&A transactions, which in turn will play an important role in permitting GCC-based companies to achieve access to international markets and transfer technology and expertise.