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Weak dollar prompts record foreign buyouts of U.S. companies
IHT.com ^ | 10/02/2007 | Robert Weisman

Posted on 10/02/2007 1:16:48 PM PDT by LM_Guy

European, Asian and Canadian companies are taking advantage of the weaker dollar to buy their U.S. counterparts at a record pace, increasing investment in the United States but also raising fears about a potential loss of jobs and autonomy.

"We could be looking at the world's largest tag sale if we continue to see declines in the dollar," said Donald Klepper-Smith, chief economist at DataCore Partners.

In the latest large deal aided by a weak dollar, Commerce Bancorp, which is based in Cherry Hill, New Jersey, agreed Tuesday to be acquired by Toronto-Dominion Bank of Canada in a cash-and-shares deal valued at $8.5 billion.

Nationally, the value of purchases of companies by non-U.S. buyers so far this year totaled $257.4 billion - more than in any full year since 2000, the height of the technology boom, according to Thomson Financial, a research firm in New York.

The buyouts are sparking anxiety in the United States, though their impact is complex. Foreign owners typically use acquisitions as an entry into the U.S. market and thus may be more willing than American buyers to invest in their new holdings, some economists say. But the risk is that they might also be quicker to cut back or consolidate U.S. operations when times get tough.

"Quite naturally, foreign companies want to play in this market," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, a trade group for small and midsize manufacturers. "They want leading-edge technology, and the United States is still the technology leader. But when they buy these companies, they're acquiring control over the most dynamic pieces of the American economy, and they're acquiring control over America's future."

Corporate deals are just one way the dollar's falling value is having an impact.......

(Excerpt) Read more at iht.com ...


TOPICS: Business/Economy
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To: Mase; 1rudeboy

He’s on CBNC right now.


21 posted on 10/02/2007 1:42:14 PM PDT by Toddsterpatriot (Ignorance of the laws of economics is no excuse.)
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To: kinoxi

IF the Commerce Bank sale is allowed by regulators, the state of NJ will never again vote a Republican into national office. The Hill and Norcross families will go from multi multi millionaires to billionaires, and their iron fist over the state Democrat apparatus will become institutionalized.

It’s a bad situation.


22 posted on 10/02/2007 1:44:04 PM PDT by JerseyHighlander
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To: JerseyHighlander

So this is about corruption you say.


23 posted on 10/02/2007 1:45:47 PM PDT by kinoxi
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To: Toddsterpatriot
ROTFLMAO

"There's a difference between the Japanese buying those assets then . . . ." Oh, yeah? So the Japanese were harmless? Now? Or then?

24 posted on 10/02/2007 1:47:27 PM PDT by 1rudeboy
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To: 1rudeboy

He’s better at moving goalposts than he is at economics.


25 posted on 10/02/2007 1:48:50 PM PDT by Toddsterpatriot (Ignorance of the laws of economics is no excuse.)
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To: El Sordo
“Didn’t we go through this in the 70’s & 80’s already?”

Well actually yes & no, it has been going on since the 70s and has never stopped. The problem is it is getting worse with entire segments of our economy becoming foreign owned and controlled.

Some Stats:

Industry Percentage Foreign Owned Sound recording industries 97% Commodity contracts dealing and brokerage 79% Motion picture and sound recording industries 75% Metal ore mining 65% Motion picture and video industries 64%

Wineries and distilleries 64% Database, directory, and other publishers 63% Book publishers 63% Cement, concrete, lime, and gypsum product 62% Engine, turbine and power transmission equipment 57%

Rubber product 53% Nonmetallic mineral product manufacturing 53% Plastics and rubber products manufacturing 52% Plastics product 51% Other insurance related activities 51%

Boiler, tank, and shipping container 50% Glass and glass product 48% Coal mining 48% Sugar and confectionery product 48% Nonmetallic mineral mining and quarrying 47%

Advertising and related services 41% Pharmaceutical and medicine 40% Clay, refractory, and other nonmetallic mineral products 40% Securities brokerage 38% Other general purpose machinery 37%

Audio and video equipment mfg and reproducing magnetic and optical media 36% Support activities for mining 36% Soap, cleaning compound, and toilet preparation 32% Chemical manufacturing 30% Industrial machinery 30%

Securities, commodity contracts, and other financial investments and related activities 30% Other food 29% Motor vehicles and parts 29% Machinery manufacturing 28% Other electrical equipment and component 28%

Securities and commodity exchanges and other financial investment activities 27% Architectural, engineering, and related services 26% Credit card issuing and other consumer credit 26% Petroleum refineries (including integrated) 25% Navigational, measuring, electromedical, and control instruments 25%

Petroleum and coal products manufacturing 25% Transportation equipment manufacturing 25% Commercial and service industry machinery 25% Basic chemical 24% Investment banking and securities dealing 24%

Semiconductor and other electronic component 23% Paint, coating, and adhesive. 22% Printing and related support activities 21% Chemical product and preparation 20% Iron, steel mills, and steel products 20%

Agriculture, construction, and mining machinery 20% Publishing industries 20% Medical equipment and supplies 20%

26 posted on 10/02/2007 1:50:35 PM PDT by LM_Guy
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To: LM_Guy; expat_panama

27 posted on 10/02/2007 1:58:33 PM PDT by Toddsterpatriot (Ignorance of the laws of economics is no excuse.)
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To: stephenjohnbanker

the euro zone may face deflation just like the yen. They may need to print more money or risk recession.


28 posted on 10/02/2007 2:02:22 PM PDT by ari-freedom (I am for traditional moral values, a strong national defense, and free markets.)
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To: shuckmaster

They buy 800 companies worth $257 billion, and you say they are acquiring control over our future? Believe me, we bought a lot of their companies as well.


29 posted on 10/02/2007 2:03:29 PM PDT by Brilliant
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To: LM_Guy

That’s OK, I am buying Chinese companies. They are increasing 10% on a daily basis.


30 posted on 10/02/2007 2:07:45 PM PDT by Always Right
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To: LM_Guy

This happened extensively in Argentina after the collapse of their currency a few years ago.


31 posted on 10/02/2007 2:09:56 PM PDT by Rockitz (This isn't rocket science- Follow the money and you'll find the truth.)
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To: Brilliant

I know of two companies that were bought by foreigners this year. One was in a get bought or die situation, and the only companies interested in buying them were foreigners (the Italians eventually backed out so the Canadians won). The other has since ended all off shoring of labor. Of course the plural of anecdote isn’t fact, but it does show this is a slightly more complicated situation than most people are saying.


32 posted on 10/02/2007 2:17:35 PM PDT by discostu (indecision may or may not be my biggest problem)
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To: ari-freedom

Yep


33 posted on 10/02/2007 2:24:04 PM PDT by stephenjohnbanker (Pray for, and support our troops(heroes) !! And vote out the RINO's!!)
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To: LM_Guy; expat_panama
The problem is it is getting worse with entire segments of our economy becoming foreign owned and controlled.

Photo Sharing and Video Hosting at Photobucket

The circles represent the size of each area's financial assets. The arrows represent the size of each region's international holdings. You'll notice that the US dominates every other region by far. I'll bet we're doing a much better job of buying their top companies, and the best new technologies, than they are of ours. This map is from 2004 but I don't doubt that it's only increased in our favor since then.

34 posted on 10/02/2007 2:27:24 PM PDT by Mase (Save me from the people who would save me from myself!)
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To: Mase

I would like to know the rate of buyouts. Obviously we have more assets. But with a falling dollar, foreigners are on a shopping spree and it is much harder for us to buy their stuff.


35 posted on 10/02/2007 2:45:40 PM PDT by ari-freedom (I am for traditional moral values, a strong national defense, and free markets.)
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To: shuckmaster
It's worth noting that "our industrial base" is not being sold to China at all . . . unless there was a major acquisition of General Motors or John Deere today by a Red Chinese front company that I hadn't heard about.

Shares of Toronto Dominion Bank lost 5% of their value today -- the company's largest decline in nearly five years. Maybe this isn't such a great deal for them after all, eh?

36 posted on 10/02/2007 2:48:37 PM PDT by Alberta's Child (I'm out on the outskirts of nowhere . . . with ghosts on my trail, chasing me there.)
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To: Mase
From the news release of our Bureau of Economic Activity's most recent version of the annual report Net International Investment Position :

U.S. Net International Investment Position at Yearend 2006

The U.S. net international investment position at yearend 2006 was -$2,539.6 billion (preliminary), as the value of foreign investments in the United States continued to exceed the value of U.S. investments abroad (table 1). At yearend 2005, the U.S. net international investment position was -$2,238.4 billion (revised). The U.S. net international investment position includes newly introduced comprehensive estimates of U.S. cross-border transactions and positions in financial derivatives (see box 1).

The -$301.3 billion change in the U.S. net investment position from yearend 2005 to yearend 2006 was largely due to especially strong net foreign purchases of U.S. securities. The impact of these net purchases was partly offset by price appreciation of U.S.-held foreign stocks that surpassed by a large amount price appreciation of foreign-held U.S. stocks, and by exchange- rate changes resulting from the appreciation of most major foreign currencies against the U.S. dollar, which raised the dollar value of U.S.-owned assets abroad.

[ ... ]

U.S.-owned assets abroad increased $2,178.7 billion to $13,755.0 billion.

U.S. holdings of foreign securities increased $1,086.4 billion to $5,432.3 billion. Holdings of foreign stocks increased as a result of large price appreciation, foreign-currency appreciation, and net U.S. purchases. Holdings of foreign bonds increased mostly as a result of net U.S. purchases.

The stock of U.S. direct investment abroad at current cost increased $320.4 billion to $2,855.6 billion, mostly as a result of net financial flows (see box 2).

Claims on foreigners reported by U.S. banks increased $583.4 billion to $3,089.0 billion.

Claims on unaffiliated foreigners reported by U.S. nonbanking concerns increased $114.4 billion to $848.5 billion.

U.S. holdings of financial derivatives with positive fair value increased $47.5 billion to $1,237.6 billion.

U.S. official reserve assets increased $31.8 billion to $219.9 billion.

Foreign-owned assets in the United States increased $2,479.9 billion to $16,294.6 billion.

Foreign official assets in the United States increased $463.9 billion to $2,770.2 billion. Net foreign purchases of U.S. Government securities accounted for most of the increase.

Foreign private holdings of U.S. securities other than U.S. Treasury securities increased $875.5 billion to $5,228.5 billion. Foreign holdings of U.S. bonds increased mostly as a result of strong net foreign purchases. Foreign holdings of U.S. stocks increased as a result of price appreciation and net foreign purchases.

U.S. liabilities to private foreigners and international financial institutions reported by U.S. banks increased $717.3 billion to $3,319.0 billion.

The stock of foreign direct investment in the United States at current cost increased $231.2 billion to $2,099.4 billion, mostly as a result of net financial flows (see box 2).

Liabilities to unaffiliated foreigners reported by U.S. nonbanking concerns increased $182.5 billion to $740.4 billion.

U.S. holdings of financial derivatives with negative fair value increased $46.5 billion to $1,178.6 billion.

U.S. currency held by foreigners increased $12.6 billion to $364.3 billion.

Foreign private holdings of U.S. Treasury securities decreased $49.6 billion to $594.2 billion, mostly as a result of net foreign sales.

[ ... ]

The Japanese government also puts out the same type of report. From the summary at Japan's International Investment Position at Year-End 2006:

I. Summary

Japan's international investment position (IIP) recorded a net asset position, the outstanding amount of external financial assets of residents in Japan minus the outstanding amount of external financial liabilities of residents in Japan, of 215.1 trillion yen at year-end 2006.

This represents an increase of 34.4 trillion yen or 19.0 percent from the previous year-end, and marks a new record high since year-end 2004.

Comparison with other major countries indicates that Japan has been the country with the largest net asset position for the 16th consecutive year since year-end 1991.

[ ... ]


37 posted on 10/02/2007 3:14:15 PM PDT by snowsislander
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To: mysterio

Wait till Citicorp plummets after announcing its earnings. When the Saud family buys the rest of it, the whining on this board will be deafening.


38 posted on 10/02/2007 3:41:42 PM PDT by FreeInWV
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To: Mase
Foreign management is not good for American workers because they are much quicker to sell them out. Most of the decisions to offshore American jobs comes from foreign born managers and executives. In my experience once an a company hires a few foreign born Indian managers to run their IT department much of the department is soon outsourced to India and any remaining jobs go to H1-B Indians. How they avoid federal prosecution for hiring primarily one ethnicity is beyond me.
39 posted on 10/02/2007 4:08:10 PM PDT by Reeses (Leftism is powered by the evil force of envy.)
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To: Mase

Cool chart. Thanks.


40 posted on 10/02/2007 4:40:59 PM PDT by Freedom_Is_Not_Free
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