Merger Mania seems to be rampant:
Mergers hit record pace
U.S. companies spent $333 billion last
year on purchasing overseas firms
January 26, 1998: 1:30 p.m. ET
Compaq to buy
DEC - Jan. 26,
1998
Big bank merger
hits Canada - Jan.
23, 1998
KPMG LLP
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NEW YORK, Jan 25 (Reuters) - U.S.-led
companies spent a record $333 billion to acquire
firms in other countries in 1997, and the momentum
is likely to continue well into this year, according to
accounting giant Klynveld Peat Marwick Goerdeler
LLP (KPMG).
The 1997 acquisitions total was up 21 percent
from the previous all-time high of $275 billion in the
prior year.
Cross-border purchasers also announced a
record 48 so-called "mega-deals" worth a total $119
billion, up 29 percent from 1996.
All the mega-deals were priced at $1 billion or
more, according to the accounting firm's latest
year-end survey of such transactions.
The average cross-border purchase cost a record
$64 million, soaring 39 percent to break last year's
record $46 million.
Notably, purchasers invested heavily in more
countries than in 1996, stepping up merger and
acquisitions in the fourth quarter.
"Goliaths in various regulated fields attracted
many of the largest cross-border prices," KPMG
said. "Purchasers of targets in developing countries
shifted their sights from the Pacific Rim to Latin
America . . . where spending almost doubled in 1997
while spending in the Pacific Rim fell by more than 20
percent. For the first time, the two regions are
attracting roughly equal amounts of M&A spending."
However, despite the global M&A boom, deals
targeting U.S. companies declined for the first time in
five years because of the strong U.S. dollar, KPMG
said.
For the first time in the 1990s, neither Germany
nor Japan ranked among the top six countries in
M&A spending.
During the fourth quarter, M&A spending soared
35 percent to $123 billion from $91 billion in the
year-ago period.
The rumored merger of U.S.-based American
Home Products and British-based SmithKline
Beecham disclosed this week would be the largest
deal of all time.
"It's hard to be global and nimble without an
aggressive M&A strategy," Stephen Blum, a KPMG
partner, said. "Technology and competition cut
months or years off product life cycles, and
regulatory change in fields such as utilities and
banking unleashes major new players to cross
borders."
Globally, financial services firms were the most
heavily targeted segment in 1997 with buyers
spending $34 billion on targets in banking and
finance, and $24 billion on insurance targets, up a
combined 60 percent from 1996, KPMG said. |
