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Foreign Acquisitions in the U.S. On Track For A Record Year

German pharmaceutical company Bayer AG (DB:BAYN) recently made an unsolicited, non-binding proposal to acquire Missouri-based fertilizer and agricultural company Monsanto Company (NYSE:MON) in a transaction valued at over $62 billion on May 18, 2016. Bayer AG will pay $122 per share and intends to finance the transaction with a combination of debt and equity. According to S&P Global Market Intelligence data, the transaction ranks as the second largest ever proposed foreign acquisition of  a U.S.-based target and the largest ever foreign acquisition in the U.S. materials sector. More significant is the accelerating share that foreign buyers account for in U.S. announced merger and acquisition transactions. An examination of U.S. M&A annual volume since 1998 reveals that the strongest year for foreign acquisitions in the U.S. based on a percentage of deal value was in 2008 when more than 24% of that year’s $828 billion in U.S. M&A involved foreign buyers.

Presently, in the aftermath of the Bayer-Monsanto announcement, proposed foreign acquisitions in the U.S. this year account for more than $224 billion in transactions or 40% of the $560.9 billion in announced U.S. M&A so far in 2016. That’s nearly double the proportion of foreign M&A transactions taking place in 2015 when 21% of last year’s U.S. deal value of $2.12 trillion, or $444 billion, was the result of foreign acquisitions. Among announced foreign acquisitions in the U.S. this year the materials sector is most active with nearly $70.5 billion in deals followed by healthcare with $50.4 billion and financials with $23.3 billion in foreign purchases. Additionally, extrapolating this year’s $224 billion in announced foreign acquisitions for the balance of the year it would be reasonable to see foreign acquisitions in the U.S. this year top the previous annual record of $444 billion set in 2015.

Foreign Acquisitions in U.S.

Year

Foreign M&A
in US $billion

US M&A
$billion

% of $ From Foreign Buyers in US M&A

Deals

1998

244.5

1450.1

16.9%

593

1999

265.1

1256.8

21.1%

756

2000

318.4

1725.5

18.5%

1069

2001

117.8

729.3

16.2%

832

2002

62.0

449.3

13.8%

562

2003

52.6

509.0

10.3%

591

2004

72.3

802.8

9.0%

689

2005

119.4

1074.7

11.1%

981

2006

263.4

1393.7

18.9%

1268

2007

325.7

1400.3

23.3%

1493

2008

200.8

828.2

24.2%

1270

2009

60.3

729.4

8.3%

951

2010

194.0

838.8

23.1%

1247

2011

160.4

1004.8

16.0%

1418

2012

198.8

917.9

21.7%

1361

2013

164.0

1109.7

14.8%

1228

2014

275.9

1515.9

18.2%

1530

2015

444.3

2119.4

21.0%

1592

2016YTD

224.5

560.9

40.0%

623

Source:  S&P Global Market Intelligence

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