Mergers and acquisitions in the GCC are mostly driven by economic diversification and market expansion.
GCC governments actively promote mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a way to consolidate companies and build up regional companies to be effective at compete on a international level, as would Amin Nasser likely tell you. The necessity for financial diversification and market expansion drives a lot of the M&A transactions into the GCC. GCC countries are working seriously to draw in FDI by making a favourable environment and increasing the ease of doing business for international investors. This plan is not merely directed to attract international investors because they will add to economic growth but, more critically, to enable M&A deals, which in turn will play an important role in permitting GCC-based businesses to get access to international markets and transfer technology and expertise.
In recently published study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers discovered that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western firms. As an example, big Arab finance institutions secured takeovers during the 2008 crises. Also, the research demonstrates that state-owned enterprises are not as likely than non-SOEs to make takeovers during times of high economic policy uncertainty. The the findings suggest that SOEs tend to be 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 mitigate prospective financial instability. Moreover, acquisitions during periods of high economic policy uncertainty are related to an increase 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 people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in similar times by capturing undervalued target companies.
Strategic mergers and acquisitions are seen as a way to tackle hurdles worldwide businesses face in Arab Gulf countries and emerging markets. Companies planning to enter and grow their reach in the GCC countries face various problems, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. Nonetheless, when they acquire regional businesses or merge with regional enterprises, they gain instant 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 company recognised as a strong rival. Nonetheless, the acquisition not only removed local competition but also provided valuable local insights, a customer base, plus an already established convenient infrastructure. Furthermore, another notable instance may be the acquisition of a Arab super application, namely a ridesharing business, by an worldwide ride-hailing services provider. The international business gained a well-established brand with a big user base and substantial knowledge of the area transportation market and consumer preferences through the acquisition.