Strategic alliances and acquisitions are effective techniques for multinational businesses planning to expand their operations into the Arab Gulf.
GCC governments actively encourage mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a way to solidify industries and build regional companies to become have the capacity to 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 activities in the GCC. GCC countries are working seriously to attract FDI by developing a favourable ecosystem and bettering the ease of doing business for international investors. This strategy is not only directed to attract international investors since they will contribute to economic growth but, more critically, to enable M&A deals, which in turn will play a substantial role in permitting GCC-based businesses to get access to international markets and transfer technology and expertise.
In a recent study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers discovered that Arab Gulf firms are more inclined to make takeovers during periods of high economic policy uncertainty, which contradicts the behaviour of Western firms. For instance, large Arab banking institutions secured takeovers through the 2008 crises. Furthermore, the study shows that state-owned enterprises are not as likely than non-SOEs to help make takeovers during times of high economic policy uncertainty. The the findings suggest that SOEs are far more cautious regarding takeovers 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 mitigate potential financial instability. Moreover, takeovers during times of high economic policy uncertainty are related to a rise in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by capturing undervalued target companies.
Strategic mergers and acquisitions are seen as a way to overcome obstacles international companies encounter in Arab Gulf countries and emerging markets. Businesses wanting to enter and expand their presence into the GCC countries face different problems, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. Nonetheless, once they buy local businesses or merge with regional enterprises, they gain immediate usage of regional knowledge and study their local partners. One of the most prominent cases of effective acquisitions in GCC markets is when a heavyweight international e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce firm recognised as being a strong competitor. Nevertheless, the acquisition not only removed regional competition but additionally offered valuable regional insights, a client base, as well as an already established convenient infrastructure. Moreover, another notable example could be the purchase of an Arab super app, particularly a ridesharing business, by an international ride-hailing services provider. The international firm gained a well-established brand name with a big user base and substantial understanding of the local transport market and client preferences through the purchase.