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October 5, 2007

US Mergers And Takeovers In European Union Increases

by Stewart Douglas

Story link: US Mergers And Takeovers In European Union Increases

The level of investment in European business acquisition from US-based investors has reached an all time high beyond total year end acquisitions last year over the first nine months of 2007, according to figures released today.

The level of investment over the first nine months is up 50% on last years figures, reflecting a growing favourable trend towards European based businesses as investment opportunities. The figure for total US investment in business acquisition currently stands at $143billion for the year on September.

Acquisitions from across the pond account for in excess of 10% of all European takeover activity, compared to 9.4% of activity in 2006, whilst only $140billion was invested over the course of 2006 compared to this year’s three quarter aggregate figures.

Whilst numerically investment from US firms and equity groups is up, as a proportion of activity it is still below the 2003 all time high of 14.7%, yet it soared well above the figures of the 1990s where US acquisitions and mergers accounted for just under 6.5% of all activity.

It is thought that a healthy underlying Eurozone economy as well as rapidly expanding trade channels through the EU have accounted for the rise in outside investment from the US. With several notable takeover bids involving Kraft and IBM in the last year, it seems that European business is booming under current market conditions.

It is expected that the level of activity within Europe will decline over the last quarter of the year as investors look less favourably on surrendering short term liquidity for long term investment projects, as a result of US liquidity problems and tightening lending policies.

With the current credit crunch environment still in full swing, it looks like the year end US investment figures may slow in comparison to recent rates.

 

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