Cross-border transactions have a different profile compared to domestic deals. Researchers have found that cross-border deals are:
More related. Cross-border acquisitions tend not to represent diversification far beyond the buyer’s core industry. Acquisitions into related businesses represent 60 to 75 percent of cross-border deals.4
Payment is mainly in cash. Many cross-border buyers do not have shares listed for trading in the foreign market. Therefore, it is not surprising that buyers tend to pay with cash rather than stock.5
Targets are mainly manufacturing firms with low intangible assets. Conn and Nielsen (1990) found that 97 percent of U.S. firms’ targets and 74 percent of U.K. firms’ targets were in manufacturing rather than finance or services.
EXHIBIT 5.1 Trends in Completed Cross-Border Mergers and Acquisitions Involving a U.S.-based Buyer or Target
| Column | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
|---|---|---|---|---|---|---|---|---|---|---|
| Number of Cross-Border Deals | Value of Cross-Border Deals | Cross-Border Deals as a Percentage of All Transactions (Domestic and Cross-Border) | Value of All Foreign Direct Investment into and out from the United States | |||||||
| Total Number | Number of Inbound Deals | Number of Outbound Deals | Total Value (Billions) | Value of Inbound (Billions) | Value of Outbound (Billions) | % of Number of Deals | % of Total Value | Inbound U.S. FDI (Billions) | Outbound U.S. FDI (Billions) | |
| 2002 | 1,489 | 649 | 840 | $107.0 | $ 65.0 | $ 42.0 | 17.6% | 10.8% | $ 39.6 | $137.8 |
| 2001 | 2,063 | 888 | 1,175 | $216.0 | $118.4 | $ 97.6 | 20.3% | 14.3% | $157.9 | $156.0 |
| 2000 | 3,259 | 1,391 | 1,868 | $433.8 | $311.5 | $122.3 | 24.0% | 13.7% | $287.7 | $152.4 |
| 1999 | 2,701 | 1,059 | 1,642 | $349.9 | $229.9 | $120.0 | 25.0% | 23.2% | $282.5 | $155.2 |
| 1998 | 2,630 | 884 | 1,746 | $320.3 | $191.8 | $128.6 | 21.9% | 22.2% | $193.4 | $132.8 |
| 1997 | 2,205 | 790 | 1,415 | $143.8 | $ 70.7 | $ 73.1 | 20.7% | 17.9% | $109.3 | $109.8 |
| 1996 | 1,952 | 689 | 1,263 | $121.2 | $ 65.2 | $ 56.0 | 19.8% | 17.6% | $ 89.0 | $ 92.7 |
| 1995 | 1,746 | 619 | 1,127 | $ 83.2 | $ 42.0 | $ 41.1 | 19.9% | 17.8% | $ 59.6 | $ 99.5 |
| 1994 | 1,415 | 555 | 860 | $ 60.6 | $ 39.0 | $ 21.6 | 19.7% | 19.4% | $ 47.4 | $ 80.7 |
| 1993 | 1,140 | 428 | 712 | $ 33.2 | $ 16.6 | $ 16.6 | 19.5% | 16.4% | $ 52.6 | $ 84.4 |
| 1992 | 1,033 | 431 | 602 | $ 28.3 | $ 13.4 | $ 14.9 | 19.5% | 19.8% | $ 21.0 | $ 48.7 |
| 1991 | 1,152 | 592 | 560 | $ 42.1 |
$ 27.6
|