Strategic alliances and acquisitions are effective techniques for multinational businesses planning to expand their presence within the Arab Gulf.
In a recently available study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more likely to make acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western businesses. As an example, big Arab banking institutions secured acquisitions throughout the financial crises. Moreover, the study shows that state-owned enterprises are less likely than non-SOEs to make takeovers during times of high economic policy uncertainty. The the findings indicate that SOEs are 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 protect national interest and mitigate potential financial instability. Furthermore, takeovers during periods of high economic policy uncertainty are associated with an increase in shareholders' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth effect highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by capturing undervalued target companies.
Strategic mergers and acquisitions have emerged as a way to tackle obstacles worldwide companies face in Arab Gulf countries and emerging markets. Companies planning to enter and expand their presence into the GCC countries face different challenges, such as cultural distinctions, unfamiliar regulatory frameworks, and market competition. However, if they buy local companies or merge with local enterprises, they gain immediate usage of regional knowledge and learn from their regional partners. One of the most prominent cases of successful acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce company recognised as a strong rival. Nevertheless, the purchase not only eliminated regional competition but also provided valuable local insights, a customer base, plus an already established convenient infrastructure. Furthermore, another notable example is the purchase of an Arab super software, specifically a ridesharing business, by an worldwide ride-hailing services provider. The multinational corporation gained a well-established brand name having a large user base and substantial knowledge of the area transportation market and consumer preferences through the purchase.
GCC governments actively promote mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a means to solidify companies and build local companies to become effective at compete on a worldwide scale, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives a lot of the M&A activities in the GCC. GCC countries are working seriously to entice FDI by making a favourable environment and increasing the ease of doing business for international investors. This strategy is not merely directed to attract international investors simply because they will add to economic growth but, more crucially, to enable M&A deals, which in turn will play an important part in allowing GCC-based companies to get access to international markets and transfer technology and expertise.