Strategic alliances and acquisitions are effective strategies for multinational companies planning to expand their presence within the Arab Gulf.
GCC governments actively promote mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a method to consolidate industries and build regional companies to be have the capacity to contending at an a global scale, as would Amin Nasser likely tell you. The need for economic diversification and market expansion drives a lot of the M&A activities into the GCC. GCC countries are working earnestly to attract FDI by developing 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 most importantly, to facilitate M&A transactions, which in turn will play an important part in allowing GCC-based businesses to achieve access to international markets and transfer technology and expertise.
In a recent study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers discovered that Arab Gulf firms are more inclined to make acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western businesses. For example, large Arab finance institutions secured takeovers through the financial crises. Additionally, the study suggests that state-owned enterprises are more unlikely than non-SOEs in order to make takeovers during periods of high economic policy uncertainty. The the findings indicate that SOEs are more cautious regarding acquisitions when comparing to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, emanates from the imperative to preserve national interest and mitigate potential financial uncertainty. Moreover, acquisitions during periods of high economic policy uncertainty are connected with a rise in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Indeed, this wealth impact highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by buying undervalued target companies.
Strategic mergers and acquisitions have emerged as a way to tackle hurdles worldwide businesses encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their reach in the GCC countries face different difficulties, such as for example cultural differences, unknown regulatory frameworks, and market competition. Nevertheless, when they buy local companies or merge with regional enterprises, they gain instant access to local knowledge and study their local partners. The most prominent cases of effective acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce company recognised being a strong rival. However, the acquisition not only removed regional competition but also offered valuable local insights, a customer base, as well as an already founded convenient infrastructure. Also, another notable example is the purchase of an Arab super software, specifically a ridesharing business, by an worldwide ride-hailing services provider. The multinational firm obtained a well-established manufacturer having a large user base and substantial knowledge of the area transportation market and consumer preferences through the purchase.