Corporate Finance : Us Cross-border M&a Outflow Sets Record


Cross-border mergers and acquisitions originating from US-based buyers reached a record $187.4 billion in the year-to-date period through December 12, 2006, an increase of 20% from the same period a year earlier, according to Dealogic.

The United Kingdom was the most targeted nation of US cross-border M&A; outflow activity, with $32.9 billion of deals, followed by Canadas $28.7 billion. The Netherlands was third, accounting for $23.6 billion of the US outflow.

The two largest US cross-border acquisitions in the year to date involved target companies based in the Netherlands. Euronext was targeted by the New York Stock Exchange, and an 80.1% interest in Philips Semiconductors was bought by a group of US-based private-equity firms, including Kohlberg Kravis Roberts and Silver Lake Partners.

Finance was the most targeted industry of US cross-border acquirers in the year to date through December 12, 2006, with deals valued at $29.3 billion, followed by the technology industry with $29.1 billion, and real estate with $23.4 billion.

Morgan Stanley led the advisory rankings for US cross-border deals with $43.8 billion, followed by Goldman Sachs with $36.4 billion and Credit Suisse with $28.8 billion, according to Dealogic.

Buyouts continued to drive overall M&A; activity worldwide in the first three quarters of 2006, with a record $462 billion of deals involving financial sponsors, which was more than double the previous record set in the comparable period of 2005, according to Thomson Financial. The $32.1 billion management buyout of US hospital chain HCA in July 2006 was the largest buyout ever. The $17.5 billion buyout of Freescale Semiconductors of the US, which was completed in December, was the largest technology buyout of all time. Freescale was spun off from Motorola in 2004.

Led by Italy-based Banca Intesas $37.6 billion agreement to merge with SanPaolo IMI, the financial sector was the most active M&A; industry during the first three quarters of 2006, according to Thomson Financial. There were some $424 billion of M&A; deals in the sector, an increase of 24% from the first nine months of 2005.

In December The Bank of New York agreed to buy Pittsburgh-based Mellon Financial for $16.5 billion, creating the largest securities servicing and asset management firm in the world. The Bank of New York Mellon, as the new company will be known, will have $16.6 trillion of assets under custody and more than $1.1 trillion in assets under management.

The Bank of New York last October swapped its branch network for JPMorgan Chases corporate trust business. The Bank of New York Mellon will have about $8 trillion in assets under trusteeship.

Thomas Renyi, chairman and chief executive of The Bank of New York, will serve as executive chairman of the new company for 18 months following the close of the transaction. Robert Kelly, president, chairman and CEO of Mellon, will serve as CEO of The Bank of New York Mellon and will succeed Renyi as chairman. Gerald Hassell, president of The Bank of New York, will hold the same position in the merged company.

Through this merger, we will be able to invest and expand more effectively than any of our competitors due to our combined scale, profitability and global reach, Kelly said in a statement.

The Bank of New York was represented in the transaction by Goldman Sachs, and Mellon was represented by UBS Investment Bank and Lazard. The transaction is expected to be completed early in the third quarter of 2007.


Gordon Platt