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Financial Synergy in Mergers and Acquisitions in Saudi Arabia

Author

Listed:
  • Basmah Al Qudaiby

    (University of Lausanne)

  • Muhammad Rahatullah Khan

    (Effat University)

Abstract

Businesses today consider mergers and acquisitions a new strategy for their company’s growth. Companies aim to grow through sales’ increase, assets purchase, profits’ accumulation and market share gains. The better way for achieving these targets is by getting into either a Merger or an Acquisition. As a matter of fact, growth through mergers and acquisitions has been a critical part of the success of many companies operating in the new economy. Mergers and Acquisitions are an important factor in building up market capitalization. Based on three detailed and in depth structured interviews with major Saudi Arabian banks it has been found that, Mergers motivated by economies of scale should be approached cautiously. Companies should also approach vertical mergers cautiously because it is often difficult to gain synergy through a vertical merger and firms should also seek out mergers which allow the firm to acquire specialized knowledge. It has also been found that the firms should look for mergers that increase market power and avoid unrelated or conglomerate mergers.

Suggested Citation

  • Basmah Al Qudaiby & Muhammad Rahatullah Khan, 2013. "Financial Synergy in Mergers and Acquisitions in Saudi Arabia," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(15), pages 181-192, December.
    • Handle: RePEc:aio:fpvfcf:v:1:y:2013:i:15:p:181-192
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    Cited by:

    1. Aevoae George Marian, 2017. "Premises and Limitations in Defining and Measuring Synergy from M&As," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 493-498, December.

    More about this item

    Keywords

    Synergy; Vertical Mergers; Saudi Arabia; Specialised Knowledge;
    All these keywords.

    JEL classification:

    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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