How FDI in GCC countries enable M&A activities

How FDI in GCC countries enable M&A activities

Blog Article

Mergers and acquisitions in the GCC are mainly driven by economic diversification and market expansion.

GCC governments actively encourage mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a method to solidify companies and develop regional businesses to become have the capacity to compete at an a worldwide level, as would Amin Nasser likely tell you. The need for economic diversification and market expansion drives much of the M&A activities in the GCC. GCC countries are working seriously to attract FDI by creating a favourable environment and bettering the ease of doing business for international investors. This plan is not merely directed to attract international investors because they will add to economic growth but, more crucially, to facilitate M&A transactions, which in turn will play a substantial role in enabling GCC-based businesses to get access to international markets and transfer technology and expertise.

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 inclined to make takeovers during periods of high economic policy uncertainty, which contradicts the behaviour of Western firms. As an example, big Arab banking institutions secured acquisitions during the financial 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 takeovers when compared to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, stems from the imperative to preserve 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 impact highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by capturing undervalued target businesses.

Strategic mergers and acquisitions have emerged as a way to overcome hurdles worldwide businesses encounter in Arab Gulf countries and emerging markets. Businesses wanting to enter and grow their presence in the GCC countries face different difficulties, such as cultural distinctions, unfamiliar regulatory frameworks, and market competition. However, if they acquire regional companies or merge with regional enterprises, they gain instant use of local knowledge and study their local partner's sucess. The most prominent examples of effective acquisitions in GCC markets is when a giant worldwide e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce firm recognised being a strong contender. But, the acquisition not merely eliminated local competition but in addition offered valuable regional insights, a client base, and an already founded convenient infrastructure. Also, another notable example could be the acquisition of an Arab super software, specifically a ridesharing company, by the international ride-hailing services provider. The international company obtained a well-established manufacturer having a large user base and substantial understanding of the area transport market and customer choices through the acquisition.