Merger volume jumps to $187bn in US
The merger and acquisition volume in the US jumped to $186.99 billion (Dh687bn) in July, the fifth straight month of growth and highest total since a year ago, according to Dealogic.
But the total includes the offer from Swiss pharmaceutical giant Roche Holding to buy the shares it doesn't already own of biotech Genentech, which Dealogic valued at $42.58bn. Subtract that blockbuster, and July M&A drops to $144.41bn, just over two-thirds the $211.59bn in activity seen in July 2007, before the credit crisis pulled the rug out from under the industry.
Likewise, Dealogic's figures showed $178.38 billion in US M&A activity for June, a 14 per cent uptick from May. But that total included Belgian brewer InBev SA's unsolicited offer for Anheuser Busch, which Dealogic calculated at $59.6bn.
In addition to the M&A activity, billions have flowed from the Middle East, China, South Korea and Singapore into US financial companies to help keep them afloat, and billions more have poured into US real estate as foreign investors have bought up icons like New York City's Chrysler Building.
Chris Johnson, chief executive of Johnson Research Group in Cleveland, said the foreign cash in flowing in to the US due to weaker dollar.
Bart Narter, senior vice-president of Celent's banking group in San Francisco, said during a recent stay in New York, he saw many European tourists shopping for bargains.
"Investment bankers are doing the same thing due to the exchange rate," he said. "They are looking at America and saying, 'This is a corporate bargain."'
Some might question whether it matters that foreign companies are buying such high-profile US corporations. InBev, for instance, has pledged not to shutter any of Anheuser's US breweries, so the deal won't have a big impact on jobs here.
"From a pure economic standpoint, it doesn't matter who owns what anymore, but from a nationalistic standpoint, I don't like it," Johnson said. "Then again, I hate when somebody's getting a bargain and it's not me."
In the banking industry, moreover, foreign infusions of capital have helped stabilise the industry, Narter added. "I think that's actually good for America, spreading the risk around. From that standpoint, I think it's a good thing that anybody is investing in America's banks."
Johnson said he doesn't think most foreign deals generate concern these days, given the globalisation of the economy.
"Look at the activity of the individual investor going abroad," he said. "Someone can go out and buy an (exchange traded fund) that represents Brazil or China."
That doesn't mean all foreign investments will be equally welcome, said Jack A Albin, chief investment officer at Harris Private Bank in Chicago.
"The overall trend is probably fine, but there will be that off deal that just won't get done for just headline reasons."
Albin even suggested that foreign money might point the way for some US investors. He cautioned against trying to bet on the next takeover target.
"This has been a parlour game for decades and one that has never really proven to be a successful strategy for even institutional investors, let alone retail," he said, but added investors might take a clue from which industries foreign investors target. "I would use these mergers as indications what sectors of the market would be attractive."