Strategic alliances and acquisitions are effective approaches for international companies looking to expand their presence into the Arab Gulf.
GCC governments actively promote mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a method to consolidate industries and develop local businesses to be capable of compete on a worldwide scale, as would Amin Nasser likely inform you. The necessity for economic diversification and market expansion drives much of the M&A transactions into the GCC. GCC countries are working seriously to entice FDI by developing a favourable ecosystem and bettering the ease of doing business for foreign investors. This strategy is not only directed to attract international investors since they will add to economic growth but, more crucially, 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.
In a recently available 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 takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western businesses. As an example, big Arab financial institutions secured acquisitions during the financial crises. Also, the research suggests that state-owned enterprises are more unlikely than non-SOEs to make 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 times of high economic policy uncertainty are related to a rise in investors' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Certainly, this wealth impact highlights the potential for SOEs just like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by buying undervalued target businesses.
Strategic mergers and acquisitions are seen as a way to tackle obstacles worldwide businesses face in Arab Gulf countries and emerging markets. Companies wanting to enter and grow their reach into the GCC countries face different challenges, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. But, if they buy regional businesses or merge with regional enterprises, they gain instant use 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 acquired a regionally leading e-commerce platform, that the giant e-commerce company recognised being a strong contender. However, the purchase not only eliminated regional competition but also offered valuable regional insights, a customer base, plus an already founded convenient infrastructure. Moreover, another notable example may be the acquisition of a Arab super application, namely a ridesharing company, by the international ride-hailing services provider. The international business gained a well-established brand with a big user base and extensive familiarity with the local transport market and client preferences through the acquisition.