The urge by foreign-based companies to acquire US technology and management know-how is on the increase once again. Acquisitions of US companies by foreign firms rose 43% in the first three months of this yearto $22 billion, from $15 billion in the first quarter of 2005according to the Zephyr electronic database published by Manchester, England-based Bureau van Dijk Electronic Publishing.
While the first-quarter 2006 total failed to match the $26 billion of US acquisitions by non-US companies in the final quarter of 2005, there has been a steady increase in US deals by companies based in emerging-market countries, says Lisa Wright, commercial director of Zephyr. The biggest such deal in the first quarter was the $7.4 billion purchase of Miami, Florida-based IVAX by Israels Teva Pharmaceuticals to create the worlds biggest maker of generic prescription drugs. Another significant US acquisition was the $643 million takeover of Marietta, Georgia-based Columbian Chemicals by South Koreas DC Chemical, in conjunction with One Equity Partners of the US, a private equity affiliate of JPMorgan Chase.
US acquisitions by companies based in emerging markets increased 314% to $8 billion in the first quarter of this year from $2 billion in the same period a year earlier. While foreign buying of US companies is currently strong, it faces potential roadblocks in the future from a stricter security-review process (see story, page 69).
Despite their rapid economic growth, China and India have been largely absent from the US M&A; market recently, Wright says. Companies in those countries are deploying their capital at home to boost their export capacity, she says. Meanwhile, acquisitions abroad by US companies rose nearly 60% in the first quarter of 2006 to $43 billion from $27 billion in the first quarter of 2005.