Strategic alliances and acquisitions provide businesses with several benefits whenever entering unknown markets.
GCC governments actively promote mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a way to solidify companies and build up regional companies to be have the capacity to competing at an a international scale, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives much of the M&A deals in the GCC. GCC countries are working earnestly to bring in FDI by developing a favourable environment and bettering the ease of doing business for foreign investors. This plan is not only directed to attract international investors simply because they will contribute to economic growth but, more most importantly, to facilitate M&A deals, which in turn will play an important role in permitting GCC-based companies to get access to international markets and transfer technology and expertise.
Strategic mergers and acquisitions are seen as a way to tackle obstacles worldwide businesses encounter in Arab Gulf countries and emerging markets. Companies planning to enter and expand their reach within the GCC countries face different difficulties, such as for example cultural differences, unknown regulatory frameworks, and market competition. Nevertheless, when they buy local businesses or merge with local enterprises, they gain immediate access to local knowledge and study their local partner's sucess. One of the more prominent examples of effective acquisitions in GCC markets is when a giant worldwide e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce corporation recognised being a strong rival. Nevertheless, the purchase not only removed regional competition but additionally provided valuable local insights, a client base, and an already established convenient infrastructure. Additionally, another notable example may be the acquisition of an Arab super software, namely a ridesharing business, by the international ride-hailing services provider. The international corporation obtained a well-established manufacturer with a large user base and considerable knowledge of the local transport market and consumer preferences through the purchase.
In recently published study that examines the relationship 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 behaviour of Western firms. For instance, big Arab financial institutions secured acquisitions throughout the 2008 crises. Furthermore, the research suggests that state-owned enterprises are more unlikely than non-SOEs to produce takeovers during times of high economic policy uncertainty. The results indicate that SOEs tend to be more cautious regarding takeovers compared to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, stems from the imperative to protect national interest and mitigate potential financial uncertainty. Furthermore, takeovers during periods of high economic policy uncertainty are associated with an increase in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by capturing undervalued target businesses.