Strategic alliances and acquisitions provide companies with several advantages whenever entering unknown markets.
GCC governments actively encourage mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a method to consolidate companies and build up regional companies to become capable of compete on a worldwide scale, as would Amin Nasser likely let you know. The need for financial diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working seriously to entice FDI by making a favourable environment and bettering the ease of doing business for foreign investors. This plan is not only directed to attract foreign investors since they will contribute to economic growth but, more crucially, to enable M&A transactions, which in turn will play a substantial role in enabling GCC-based companies to get access to international markets and transfer technology and expertise.
Strategic mergers and acquisitions are seen as a way to overcome hurdles international companies encounter in Arab Gulf countries and emerging markets. Companies planning to enter and expand their presence into the GCC countries face various difficulties, such as for example cultural differences, unknown regulatory frameworks, and market competition. However, once they buy local businesses or merge with local enterprises, they gain instant use of regional knowledge and study their local partner's sucess. One of the more prominent examples of successful acquisitions in GCC markets is when a heavyweight international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce corporation recognised as a strong competitor. But, the acquisition not only removed regional competition but also offered valuable regional insights, a client base, and an already founded convenient infrastructure. Furthermore, another notable example may be the purchase of a Arab super app, specifically a ridesharing business, by the international ride-hailing services provider. The multinational company gained a well-established manufacturer with a large user base and substantial familiarity with the local transportation market and client choices through the purchase.
In recently published study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers discovered that Arab Gulf firms are more inclined to make takeovers during times of high economic policy uncertainty, which contradicts the behaviour of Western firms. For instance, large Arab banking institutions secured takeovers through the 2008 crises. Furthermore, the study demonstrates 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 indicate that SOEs are more prudent regarding acquisitions in comparison with 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 times of high economic policy uncertainty are connected with 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 people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by capturing undervalued target companies.