Why M&As in GCC countries are recommended

Strategic alliances and acquisitions are effective strategies for international companies planning to expand their operations into the Arab Gulf.

 

 

In recently published study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers found that Arab Gulf firms are more likely to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western businesses. For instance, large Arab banking institutions secured acquisitions during the 2008 crises. Additionally, the analysis demonstrates that state-owned enterprises are not as likely than non-SOEs to produce acquisitions during periods of high economic policy uncertainty. The the findings suggest that SOEs tend to be more prudent regarding acquisitions when compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems 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 impact is more noticable for SOEs. Indeed, this wealth effect highlights the potential for SOEs just like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by buying undervalued target companies.

GCC governments actively encourage mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a means to solidify companies and build up regional businesses to be have the capacity to contending on a global level, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working seriously to draw in FDI by creating a favourable ecosystem and increasing the ease of doing business for foreign investors. This plan is not only directed to attract foreign investors since they will contribute to economic growth but, more most importantly, to facilitate M&A deals, which in turn will play an important role 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 tackle obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Companies planning to enter and expand their reach within the GCC countries face different difficulties, such as cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, when they buy local companies or merge with local enterprises, they gain immediate usage of local knowledge and study their local partner's sucess. One of the most prominent cases of successful acquisitions in GCC markets is when a giant worldwide e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce corporation recognised as being a strong contender. Nonetheless, the acquisition not only removed local competition but in addition offered valuable local insights, a client base, and an already founded convenient infrastructure. Furthermore, another notable instance could be the acquisition of a Arab super app, specifically a ridesharing business, by an worldwide ride-hailing services provider. The international business gained a well-established brand name having a big user base and extensive understanding of the area transportation market and client choices through the acquisition.

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