It was followed by France, which acquired Pounds 92.7bn worth of the world’s businesses, the North America with Pounds 92bn and Germany with Pounds 42bn. In terms of regional bidding activity Western European countries outbid all other regions with outward investment at Pounds 216bn, up from Pounds 153bn in 1999.
The UK’s Pounds 228bn total was boosted by Vodafone’s Pounds 116bn acquisition of Mannesman, the biggest deal of the year, according to KPMG’s analysis of cross-border mergers and acquisitions activity in 2000.
A total of Pounds 151bn of European investments flowed into the US, with only Pounds 59bn making the reverse journey across the Atlantic, a ratio of two-and-a-half to one. All in all, European plcs made 453 acquisitions of US companies a 20% increase on 1999.
John Griffith-Jones, European head of KPMG corporate finance said European companies were now more willing than ever to invest outside their own borders.
He said this was a realisation on the part of European corporates that ‘to be a serious global player you need to capture market share in the US’.
Telecommunications and broadcasting was, as expected, the sector which saw the most mergers and acquisitions activity as it targeted over a third of all deals, with the financial sector targeting Pounds 107bn.
However, is was the computers and electronics sector that made a massive leap, which saw bidding activity increase, by Pounds 30bn to Pounds 79bn, an increase of nearly 62% from 1999. Manufacturing also registered strong growth, climbing to Pounds 69bn, an increase of 22%, while the most notable drop occurred in pharmaceuticals, which could not replicate last year’s deals like the Astra Zeneca merger, and tumbled to Pounds 24bn.
Commenting on these figures, Griffith-Jones, said analysts were too quick to dismiss the old economy, but ‘the pressure of globalisation, low cost production and shared technology’ were now more pressing than ever.
However he doubted the telecoms sector could sustain a similar level of activity in 2001, as the high prices paid for third generation mobile phone licenses had left European telecommunications companies with high levels of debt.
‘This coupled with recent borrowing restrictions is likely to curtail activity,’ he added.
Predictions for merger and acquisition activity in 2001 were generally bearish, following a 33% fall in cross border deals in the fourth quarter of 2000.
However, according to Griffith Jones, because of the recent strengthening of the euro, and a predicted early weakening in the US economy, the European acquisitive drive into North America is expected to continue.
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