Mergers and acquisitions in the GCC are mainly driven by economic diversification and market expansion.
In a recently available study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers discovered that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the behaviour of Western businesses. For instance, big Arab financial institutions secured acquisitions through the financial crises. Moreover, the analysis shows that state-owned enterprises are more unlikely than non-SOEs to create takeovers during times of high economic policy uncertainty. The results suggest that SOEs are far more prudent regarding acquisitions when compared to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to preserve national interest and mitigate prospective financial instability. Moreover, takeovers during times of high economic policy uncertainty are associated with an increase in investors' 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 possibilities in such times by capturing undervalued target companies.
GCC governments actively promote mergers and acquisitions through incentives such as for example taxation breaks and regulatory approval as a means to consolidate industries and build up local companies to become capable of competing at an a worldwide level, as would Amin Nasser likely let you know. The need for financial diversification and market expansion drives a lot of the M&A transactions in the GCC. GCC countries are working earnestly to draw in FDI by developing a favourable ecosystem and increasing the ease of doing business for foreign investors. This strategy is not only directed to attract foreign investors because they will contribute to economic growth but, more crucially, to facilitate M&A deals, which in turn will play a substantial part in permitting GCC-based businesses to achieve access to international markets and transfer technology and expertise.
Strategic mergers and acquisitions are seen as a way to overcome obstacles international businesses encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their presence in the GCC countries face different problems, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, if they acquire regional companies or merge with regional enterprises, they gain immediate usage of regional knowledge and learn from their local partner's sucess. One of the more prominent cases of successful acquisitions in GCC markets is when a giant worldwide e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce corporation recognised as being a strong competitor. Nevertheless, the acquisition not merely removed local competition but in addition provided valuable local insights, a customer base, plus an already founded convenient infrastructure. Moreover, another notable example could be the acquisition of an Arab super software, specifically a ridesharing company, by the worldwide ride-hailing services provider. The multinational corporation gained a well-established brand with a big user base and substantial knowledge of the area transportation market and customer choices through the acquisition.