Strategic alliances and acquisitions provide businesses with several advantages whenever entering unknown markets.
GCC governments actively promote mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a method to consolidate companies and build regional businesses to be have the capacity to contending on a worldwide scale, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working earnestly to draw in FDI by developing a favourable ecosystem and bettering the ease of doing business for foreign investors. This plan is not only directed to attract international investors because they will add to economic growth but, more critically, to enable M&A transactions, which in turn will play a substantial 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 attempting to enter and expand their presence into the GCC countries face various problems, such as cultural differences, unknown regulatory frameworks, and market competition. But, once they buy local businesses or merge with regional enterprises, they gain instant usage of local knowledge and study their local partners. One of the more prominent examples of successful acquisitions in GCC markets is when a heavyweight international e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce corporation recognised being a strong rival. Nevertheless, the purchase not merely eliminated regional competition but in addition offered valuable regional insights, a client base, and an already established convenient infrastructure. Additionally, another notable example may be the purchase of a Arab super app, specifically a ridesharing business, by an international ride-hailing services provider. The international firm obtained a well-established brand by having a large user base and extensive understanding of the area transportation market and client choices through the purchase.
In a recent study that examines the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western firms. For instance, large Arab finance institutions secured takeovers during the financial crises. Moreover, the research suggests that state-owned enterprises are more unlikely than non-SOEs to create acquisitions during times of high economic policy uncertainty. The the findings suggest that SOEs are far more prudent regarding acquisitions in comparison with their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to protect national interest and minimising prospective financial uncertainty. Furthermore, takeovers during periods of high economic policy uncertainty are associated with an increase in shareholders' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Indeed, this wealth effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by capturing undervalued target companies.