Here’s a sign of confidence in the outlook for the American economy:
The number of foreign companies buying up U.S. companies has surged over the past year, rising 42 percent in the first quarter over the same period one year ago, according to Richard Peterson, director of Global Markets Intelligence at S&P Capital IQ.
“If you look at the top dozen deals announced, five of them involve foreign companies buying U.S. companies,” Peterson said.
The cross-border deal-making is concentrated in three industries: Healthcare, information technology and industrial companies, he said. For example, in January Swiss pharmaceutical company Roche Group made an offer to buy U.S. diagnostics company Illumina for some $6 billion.
The U.S. has seen the slowest start to a year for domestic mergers and acquisitions since 2003, Peterson said. The sluggish deal activity is unusual, he added, especially given that company profits are up, corporate balance sheets are flush with cash and the outlook for the economy is improving.
“With those factors in place, you’d think that we would see M&A ratcheted up to 2011 levels,” he said, adding that overseas companies are picking up the slack.
“Companies overseas, in places like Europe, are seeing the U.S. as a safe haven; a place of economic growth compared to their own countries,” Peterson said.
By contrast, U.S. companies are engaging in fewer deals because they see uncertainties, such as the potential for greater regulation and healthcare costs, he added.
