Mergers and acquisitions within the GCC are largely 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 method to consolidate industries and build regional companies to be have the capacity to compete on a international level, as would Amin Nasser likely let you know. The necessity for financial diversification and market expansion drives much of the M&A transactions into the GCC. GCC countries are working seriously to attract FDI by creating a favourable environment and bettering the ease of doing business for international investors. This strategy is not only directed to attract foreign investors simply because they will add to economic growth but, more most importantly, to facilitate M&A transactions, which in turn will play an important part in enabling GCC-based businesses to gain access to international markets and transfer technology and expertise.
In a recent study that examines 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 acquisitions during periods of high economic policy uncertainty, which contradicts the behaviour of Western companies. For instance, big Arab banking institutions secured takeovers through the 2008 crises. Furthermore, the study shows that state-owned enterprises are not as likely than non-SOEs to help make takeovers 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 shareholders' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Indeed, this wealth effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by buying undervalued target businesses.
Strategic mergers and acquisitions have emerged as a way to tackle obstacles international businesses encounter in Arab Gulf countries and emerging markets. Businesses planning to enter and grow their presence in the GCC countries face different problems, such as for instance cultural differences, unfamiliar regulatory frameworks, and market competition. But, once they acquire regional companies or merge with regional enterprises, they gain immediate usage of regional knowledge and learn from their regional partner's sucess. The most prominent examples of effective acquisitions in GCC markets is when a giant international e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce corporation recognised as being a strong competitor. Nevertheless, the acquisition not merely eliminated regional competition but additionally offered valuable regional insights, a client base, and an already founded convenient infrastructure. Also, another notable example could be the acquisition of an Arab super application, specifically a ridesharing business, by the international ride-hailing services provider. The international business obtained a well-established manufacturer having a large user base and extensive familiarity with the local transportation market and consumer choices through the acquisition.