On successful corporate strategies in the the Arabian Gulf

On successful corporate strategies in the the Arabian Gulf

Blog Article

Foreign businesses wanting to enter GCC markets can overcome regional challenges through M&A transactions.

In a recent study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the behaviour of Western firms. For example, big Arab banking institutions secured acquisitions during the 2008 crises. Also, 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 the findings indicate that SOEs are more cautious regarding acquisitions in comparison with 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. Moreover, takeovers during times of high economic policy uncertainty are associated with an increase in shareholders' wealth for acquirers, and this wealth effect is more noticable for SOEs. Indeed, this wealth impact highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by buying undervalued target companies.

Strategic mergers and acquisitions have emerged as a way to tackle obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Companies planning to enter and grow their presence into the GCC countries face various difficulties, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, when they buy local companies or merge with regional enterprises, they gain instant access to regional knowledge and learn from their regional partners. One of the more prominent examples of effective acquisitions in GCC markets is when a giant worldwide e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce firm recognised being a strong rival. Nonetheless, the purchase not only removed local competition but in addition offered valuable regional insights, a client base, as well as 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 multinational company gained a well-established brand by having a large user base and substantial familiarity with the local transport market and consumer preferences through the purchase.

GCC governments actively promote mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a way to consolidate industries and build up local companies to become capable of contending at an a worldwide scale, as would Amin Nasser likely tell you. The need for financial diversification and market expansion drives a lot of the M&A deals in the GCC. GCC countries are working earnestly to bring in FDI by creating a favourable environment and bettering the ease of doing business for international investors. This plan is not only directed to attract foreign investors simply because they will add to economic growth but, more most importantly, to facilitate M&A transactions, which in turn will play an important part in enabling GCC-based companies to gain access to international markets and transfer technology and expertise.