The value of transactions undertaken by European firms that merged or acquired US companies grew by a thumping 294 per cent last year as they scrambled to secure a foothold in the US market.
According to the latest figures from mergers and acquisitions specialist, Broadview, Europeans purchased 94 US companies in the first half of this year compared to 70 in the first half of 1998 and 40 in the first half of 1997. The value of these deals also skyrocketed to $72.8 billion from $18.5 billion last year and $1.8 billion in 1997.
The transactions included Alcatel's $1.6 billion acquisition of enterprise communications supplier Xylan, and GEC's acquisition of Fore Systems and Reltec for $4.5 billion and $2 billion, respectively.
Paul Deninger, Broadview’s chairman and chief executive, said: "While US companies have been staking their claim abroad for several years, this is the first sign in at least a decade of a similar broad effort by European companies. This is most prevalent in the hardware industry, where European players seek access to next generation technology developed by the US companies to establish a US presence."
In the global IT, media and communications industries, there were 2,900 deals valued at a total of $545 billion in the first month of this year alone. This compares to just $488 billion for the whole of 1998, and nearly doubles the $283 billion worth of activities in the first six months of last year.
The runaway success of the Web drove much of the activity, however, particularly in the US where recently floated companies used their high valuations to fund spending sprees. Such acquisitions include Yahoo's $5.7 billion purchase of Broadcast.com, @Home's $7.9 billion deal with Excite, and Global Crossing's $12.6 billion bid for Frontier.
The telecoms sector also saw the value of deals grow 66 per cent to $271.5 billion for the first six months of the year compared to $163.2 billion during the same period last year. But the networks backbone segment witnessed the sharpest rise in transaction values, increasing 71 per cent to $10.6 billion in 1999 from $6.2 billion in the first six months of last year.
The race to build converged networks in the networking hardware space also contributed to a 125 per cent growth in the value of deals to $100 billion in 1999 from $44.5 billion in the first half of last year. The number of transactions undertaken remained flat, however, rising just three per cent to 331 in 1999 from 320 last year.
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