Transatlantic Mergers Surged 30% in 2006
Transatlantic mergers and acquisitions surged 30% in 2006 from a year earlier, with buyers from the U.S. side spending a record amount on European businesses, according to Thomson Financial.
U.S. acquirers spent $109.6 billion buying European companies in 2006, with a total of 740 transactions. That marks almost a 15% increase over the number of deals in 2005.
Analysts point to a less-regulated market in Europe to account for the upsurge in purchasing activity by U.S. firms.
"There's no Sarbox concerns [in Europe] that some would be concerned about," Thomson Financial Senior Researach Analyst Richard Peterson told CNBC's Rebecca Jarvis. "That being said, though, it's a growing market, an integrated currency. The growth rates in many sectors of many countries are expected to exceed that of the United States, and the valuations seem attractive."
Those valuations have drawn the attention of both strategic and private equity bidders in the U.S. Goldman Sachs' private equity arm, for instance, spent $6 billion to acquire Associated British Ports in August. In one of the bigger deals, the New York Stock Exchange is expected to buy the Paris-based Euronext exchange for $14 billion.
But M&A dollars flow across the Atlantic both ways. The single largest transatlantic buyout this year was made by France's Alcatel, which spent $18 billion to scoop up Lucent Technologies. Overall, European buyers acquired 420 U.S. companies in 2006.
Cross-Atlantic mergers are likely to maintain steam into next year, analysts say, but 2007 might see most of the buying activity come from the European side. An expected slowing in the U.S. economy, combined with a weakening dollar, could make U.S. targets more attainable to foreign buyers.
In contrast, valuations in the EU are climbing as European economies grow stronger.