Mergers and acquisitions within the GCC are mostly driven by economic diversification and market expansion.
GCC governments actively promote mergers and acquisitions through incentives such as tax breaks and regulatory approval as a way to consolidate industries and develop local companies to become have the capacity to competing on a international level, as would Amin Nasser likely let you know. The necessity for financial 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 ecosystem and bettering the ease of doing business for foreign investors. This strategy is not only directed to attract foreign investors simply because they will add to economic growth but, more most importantly, to enable M&A deals, which in turn will play a significant role in permitting GCC-based companies to achieve 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 researchers discovered that Arab Gulf firms are more inclined to make takeovers during periods of high economic policy uncertainty, which contradicts the conduct of Western firms. For example, large Arab financial institutions secured acquisitions during the financial crises. Furthermore, the study shows that state-owned enterprises are less likely than non-SOEs to create acquisitions during periods of high economic policy uncertainty. The results indicate that SOEs are more cautious regarding takeovers when compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to protect national interest and minimising prospective financial uncertainty. Furthermore, takeovers during times of high economic policy uncertainty are related to an increase in shareholders' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Indeed, 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 have emerged as a way to overcome obstacles international businesses face in Arab Gulf countries and emerging markets. Companies planning to enter and grow their reach in the GCC countries face various problems, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. However, if they buy local businesses or merge with local enterprises, they gain instant use of local knowledge and study their regional partners. One of the most prominent cases of successful acquisitions in GCC markets is when a giant worldwide e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce corporation recognised as being a strong rival. Nonetheless, the purchase not only removed local competition but also offered valuable local insights, a client base, as well as an already established convenient infrastructure. Also, another notable instance could be the purchase of a Arab super software, particularly a ridesharing company, by an worldwide ride-hailing services provider. The international company gained a well-established brand having a big user base and considerable familiarity with the area transportation market and customer choices through the purchase.