Strategic alliances and acquisitions are effective approaches for international companies aiming to expand their operations into the Arab Gulf.
GCC governments actively promote mergers and acquisitions through incentives such as tax breaks and regulatory approval as a method to consolidate industries and develop regional companies to become capable of contending at an a global scale, as would Amin Nasser likely tell you. The need for financial diversification and market expansion drives a lot of the M&A activities in the GCC. GCC countries are working seriously to attract FDI by creating a favourable ecosystem and bettering the ease of doing business for international investors. This strategy is not only directed to attract international investors since they will contribute to economic growth but, more crucially, to facilitate M&A deals, which in turn will play a substantial role in allowing GCC-based companies to achieve access to international markets and transfer technology and expertise.
In recently published study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers found 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 in order to 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, 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 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 possibilities in similar times by buying undervalued target companies.
Strategic mergers and acquisitions are seen as a way to overcome obstacles international businesses face in Arab Gulf countries and emerging markets. Businesses planning to enter and grow their reach within the GCC countries face various difficulties, such as for instance cultural differences, unfamiliar regulatory frameworks, and market competition. However, if they buy regional companies or merge with regional enterprises, they gain immediate access to regional knowledge and study their regional partner's sucess. The most prominent examples of successful acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce corporation recognised as a strong rival. But, the purchase not only eliminated local competition but in addition provided valuable local insights, a customer base, plus an already founded convenient infrastructure. Also, another notable example is the purchase of a Arab super application, namely a ridesharing business, by the international ride-hailing services provider. The multinational firm gained a well-established brand with a big user base and substantial understanding of the local transport market and client preferences through the purchase.