Thread: U.S. Companies Buying Up Foreign Competition

U.S. Companies Buying Up Foreign Competition



If you can’t beat them, buy them.

Flush with cash, and coupled with lackluster growth and good value in the emerging markets have given many U.S. companies reason for acquiring companies abroad, KPMG said in a report released Sept. 9.

The semi-annual KPMG study on mergers and acquisitions found that U.S. companies completed 116 emerging market acquisitions in the first half of 2013, up from 110 in the second half of 2012. That’s beat the overall M&A flow within the developed economies of Europe, Australia, Canada and Japan. Deal volume dropped 13% from 607 in the second half of 2012 to 526 in the first half of 2013.

“U.S. companies are exhibiting higher levels of confidence domestically and we’re starting to see this translate into increased acquisition activity in emerging markets,” said Mark Barnes, national leader of KPMG’s U.S. High Growth Markets practice. “The United States was one of only a few developed economies to have an uptick in…deals, as overall…activity was at its lowest since 2009.”

The most popular geographic targets for U.S. companies in the first half of 2013 were Brazil (25 deals), India (18 deals), South American countries excluding Brazil (15), South and East Asia (15), and Central America and Caribbean (14).

South and East Asia (88) and China (69) were the most popular targets for companies based in developed economies.

Going the other way, emerging market nations — facing weaker economic fundamentals — were more cautious about investing abroad. Overall deal volume fell 26% from 228 acquisitions during the second half of 2012 to 169 in the first half of 2013, according to the study.

U.S. companies remained the most popular targets for emerging market companies with 31 acquisitions made in the United States in the first half of 2013, down from the 52 deals completed in the second half of 2012.

The buyers came from South and East Asia (9) and India (7). The region accounted for the majority of acquisitions of U.S. companies so far this year.

Emerging market to developed market transactions fell to their lowest level since 2005.

“Many high growth market companies are taking a ‘wait and see’ approach before investing in developed economies because many of them are experiencing varying degrees of economic uncertainty,” said Barnes. “The United States continues to remain the developed market of choice for (these) deals due to its many positive attributes including market size, plentiful resources, and skilled workforce,” he said.

Globally, South and East Asia (31) and China (29) were the top emerging acquirers cutting deals in the first half of 2013 with companies in the developed world.

“Although high-growth-to-developed market transactions have declined over last year, the United States continues to hold attractive investment options for companies around the globe looking to accelerate growth by making acquisitions that expand their geographic footprint,” said Phil Isom, head of KPMG Corporate Finance LLC.

“In terms of the uptick in developed-to-high-growth market deals, U.S. market conditions, highlighted by relatively easy access to capital, elevated cash levels on corporate balance sheets, and low interest rates, have resulted in an increased capacity for U.S. companies to do deals,” he said.

http://www.forbes.com/sites/kenrapoz...n-competition/

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