Foreign Buyers Flock To U.S. Companies

Not since 1990, has there been such a high percentage of foreigners opening their check books to buy U.S. companies (see stats below). Today's $8.5 billion offer for Commerce Bank from Canada's TD Bank is just the latest and part of a growing trend of cross border transactions coming from Canada and other countries. As the dollar continues to weaken, traders expect even more buyers from around the globe to hunt for U.S. companies they can pick up on the cheap.

"That's the evidence of a weak dollar transaction. Whether it's Canada or another country, it'll be interesting to see how the market is treated from a dollar point of view," said Bill Nichols, senior managing director at Bear Stearns.

Thomson Financial data shows that year-to-date, 21.19% of deals in the U.S. have involved foreign buyers. It's not a stretch to say that number will grow. Foreign buyers should increasingly make up the buying pool as private equity buyers stay on the sidelines while the still ailing credit markets work through a record backlog of buyout debt.

The last time the percentage of foreign buyer acquisitions was this high was in 1990 when it reached 28.2% of all deals. This year, there have been $1.3 trillion announced deals to date. In 1990, there were $172.58 billion worth of deals for U.S. companies. The year 2000 also saw a big influx of foreign buyers, amounting to 19%. Last year, foreigners totaled 12.7% of buyers. There were a total $1.5 trillion deals in 2006.

The Canadian dollar hit one for one parity with the U.S. dollar on September 20 for the first time in 31 years. Needless to say, an increased amount of buying has been coming from Canada. Canadian deals year-to-date total $51.4 billion, up from $36.1 billion last year.

So far this year, "one of the biggest deals obviously was the Saudi investment group buying GE plastic," said Richard Peterson, director of Capital Markets at Thomson Financial. "Right now on the horizon, there's no impetus that will stop this continuing flood of foreign buying. Obviously, you have the combination of weak currency, attractive assets and buyers who covet having a foothold in the U.S. Put all that together and you have more foreign participation," said Peterson, who specializes in mergers and initial public offerings.

The types of companies that are attracting interest include technology, industrial, financial, and real estate. "If you take the view that a bottom is near in some of these markets, what looks like like a risk in 2007 might be a great bargain in a year or two," Peterson said.

Traders tell us they see the telltale signs of foreigners snapping up U.S. stocks.

John O'Donoghue, co-head of trading at Cowen, says he sees signs that foreign entities are buying stocks through ETFs such as oil services and other plays. But he says he has not seen buying in individual stock names. "Foreign investors can buy USA Inc here at a 20 percent discount...There's definite downside support for this tape vis a vis foreign buyers," said O'Donoghue.

The dollar was up todaybut continues to trade at historic lows against a basket of currencies. It has lost about 7% year to date against the euro.

Leading all-time foreign acquisitions in the U.S.:

Date Announced	Target Name	Acquiror Name	Acquiror Nation	Rank Value of Deal ($mil)
1/15/1999	AirTouch Communications Inc	Vodafone Group PLC	United Kingdom	65,762.87
8/11/1998	Amoco Corp	British Petroleum Co PLC	United Kingdom	52,717.09
5/6/1998	Chrysler Corp	Daimler-Benz AG	Germany	40,466.48
7/24/2000	VoiceStream Wireless Corp	Deutsche Telekom AG	Germany	34,060.57
4/1/1999	Atlantic Richfield Co	BP Amoco PLC	United Kingdom	33,485.21
5/2/2000	Bestfoods	Unilever PLC	United Kingdom	23,699.21
7/17/2007	Lyondell Chemical Co	Basell NV	Netherlands	18,765.48
11/14/2002	Household International Inc	HSBC Holdings PLC{HSBC}	United Kingdom	15,294.06
4/23/2007	MedImmune Inc	AstraZeneca PLC	United Kingdom	14,681.23
3/24/2006	Lucent Technologies Inc	Alcatel SA	France	14,674.18

Largest foreign acquisitions in U.S. real estate:

Date Announced	Target Name	Acquiror Name	Acquiror Nation	Rank Value of Deal ($mil)
2/27/2007	New Plan Excel Realty Trust	Centro Retail Group	Australia	5,364.84
6/5/2006	Trizec Properties Inc	Investor Group	Canada	4,746.76
7/9/2006	Heritage Ppty Invest Trust Inc	Centro Properties Group	Australia	3,113.58
9/26/2000	Urban Shopping Centers Inc	Rodamco North America NV	Netherlands	2,884.59
8/22/2007	CityCenter Holdings LLC	Infinity World Investments	Utd Arab Em	2,700.00
2/14/2005	CalPERS/First Washington-Ret	Investor Group	Australia	2,680.00
7/19/2007	Williams Scotsman Int Inc	Algeco SA	France	2,242.27
11/1/2004	US Premium Office Properties	Investor Group	Singapore	1,852.00
4/14/1997	APL Ltd	Neptune Orient Lines Ltd	Singapore	1,301.70
12/25/2005	Axa Financial Center,New York	Hudson Waterfront Associates	Hong Kong	1,250.00

Source: Thomson Financial

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