Strategic alliances and acquisitions provide businesses with many perks whenever entering unfamiliar markets.
In a recent study that examines the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors discovered that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the behaviour of Western companies. For instance, big Arab banking institutions secured acquisitions throughout the financial crises. Additionally, the research suggests that state-owned enterprises are not as likely than non-SOEs to create acquisitions during periods of high economic policy uncertainty. The the findings suggest that SOEs tend to be more cautious regarding acquisitions when comparing to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to preserve national interest and minimising prospective financial instability. Furthermore, takeovers during periods of high economic policy uncertainty are connected with an increase in investors' wealth for acquirers, and this wealth impact is more pronounced for SOEs. Certainly, this wealth effect highlights the potential for SOEs just like the ones 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 instance taxation breaks and regulatory approval as a means to solidify industries and develop local businesses to be effective at competing on a worldwide scale, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives a lot of the M&A activities in the GCC. GCC countries are working earnestly to invite FDI by making a favourable environment and increasing the ease of doing business for international investors. This strategy is not only directed to attract foreign investors since they will add to economic growth but, more crucially, to facilitate M&A deals, which in turn will play an important part in enabling GCC-based companies to achieve access to international markets and transfer technology and expertise.
Strategic mergers and acquisitions have emerged as a way to tackle obstacles worldwide businesses face in Arab Gulf countries and emerging markets. Companies attempting to enter and grow their reach into the GCC countries face different challenges, such as for instance cultural differences, unknown regulatory frameworks, and market competition. But, if they acquire local businesses or merge with local enterprises, they gain instant use of local knowledge and study their local partners. The most prominent cases of effective acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce company recognised as being a strong rival. Nevertheless, the purchase not only removed local competition but also offered valuable local insights, a customer base, as well as an already founded convenient infrastructure. Furthermore, another notable example is the acquisition of an Arab super application, particularly a ridesharing business, by the international ride-hailing services provider. The multinational corporation obtained a well-established brand name with a large user base and extensive understanding of the local transportation market and client choices through the acquisition.