Strategic alliances and acquisitions are effective techniques for international companies looking to expand their presence into the Arab Gulf.
GCC governments actively encourage mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a means to solidify companies and build up regional companies to become effective at competing at an a international scale, as would Amin Nasser likely let you know. The need for financial diversification and market expansion drives much of the M&A activities in the GCC. GCC countries are working earnestly to draw in FDI by creating a favourable ecosystem and increasing the ease of doing business for international investors. This strategy is not merely directed to attract foreign investors because they will add to economic growth but, more most importantly, to facilitate M&A deals, which in turn will play a significant part in allowing GCC-based businesses to achieve access to international markets and transfer technology and expertise.
Strategic mergers and acquisitions are seen as a way to tackle hurdles international companies face in Arab Gulf countries and emerging markets. Businesses wanting to enter and expand their reach within the GCC countries face different challenges, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, when they buy regional businesses or merge with local enterprises, they gain immediate usage of local knowledge and study their regional partners. One of the more 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 competitor. But, the purchase not only removed regional competition but in addition offered valuable regional insights, a customer base, as well as an already founded convenient infrastructure. Moreover, another notable instance is the purchase of an Arab super software, namely a ridesharing business, by an international ride-hailing services provider. The international corporation obtained a well-established brand name having a big 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 acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western firms. For instance, big Arab finance institutions secured acquisitions throughout the 2008 crises. Also, the analysis demonstrates that state-owned enterprises are more unlikely than non-SOEs to create acquisitions during times of high economic policy uncertainty. The the findings indicate that SOEs tend to be more cautious regarding takeovers 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 minimising prospective financial uncertainty. Furthermore, takeovers during periods of high economic policy uncertainty are related to a rise in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by buying undervalued target businesses.