On successful corporate strategies in the Arab gulf

On successful corporate strategies in the Arab gulf

Blog Article

Mergers and acquisitions within the GCC are largely driven by economic diversification and market expansion.

In a recently available study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers found that Arab Gulf firms are more inclined to make takeovers during periods of high economic policy uncertainty, which contradicts the conduct of Western businesses. For instance, big Arab financial institutions secured acquisitions through the financial crises. Also, the study demonstrates that state-owned enterprises are more unlikely than non-SOEs to produce takeovers during times of high economic policy uncertainty. The the findings indicate that SOEs tend to be more cautious regarding acquisitions when compared to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, emanates from the imperative to preserve national interest and minimising prospective financial instability. Furthermore, acquisitions during periods of high economic policy uncertainty are associated with a rise in shareholders' wealth for acquirers, and this wealth impact is more noticable for SOEs. Indeed, this wealth effect highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by buying undervalued target businesses.

GCC governments actively promote mergers and acquisitions through incentives such as tax breaks and regulatory approval as a way to solidify companies and build up local companies to become capable of competing on a international scale, as would Amin Nasser likely tell you. The need for economic diversification and market expansion drives a lot of the M&A activities in the GCC. GCC countries are working seriously to attract FDI by creating a favourable environment and increasing the ease of doing business for international investors. This plan is not merely directed to attract international investors because they will contribute to economic growth but, more critically, to enable M&A deals, which in turn will play a significant part in enabling 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 hurdles worldwide companies face in Arab Gulf countries and emerging markets. Companies attempting to enter and grow their presence within the GCC countries face different challenges, such as for instance cultural distinctions, unknown regulatory frameworks, and market competition. But, when they acquire local businesses or merge with regional enterprises, they gain immediate use of local knowledge and learn from their regional partner's sucess. One of the more prominent examples of successful acquisitions in GCC markets is when a giant international e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce firm recognised being a strong competitor. However, the purchase not merely removed regional competition but in addition provided valuable local insights, a client base, plus an already established convenient infrastructure. Additionally, another notable instance may be the acquisition of an Arab super app, particularly a ridesharing business, by the worldwide ride-hailing services provider. The international firm gained a well-established brand having a large user base and considerable knowledge of the area transport market and client preferences through the acquisition.