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International Trade and Finance

Notes Table 5 : U.S. and Foreign Acquisition Activity, 1997-2006

Foreign
U.S. Acquisitions Acquisitions of U.S. U.S. Acquisitions of
Total Acquisitions U.S. Companies Companies Foreign Companies

Year Number $ Number of $ Number $ Number $
of Deals Billions Deals Billions of Deals Billions of Deals Billions
1997 8,479 $771.0 6,317 $606.3 775 $84.9 1,387 $80.3
1998 10,193 1,373.8 7,575 1,019.6 971 227.0 1,647 127.2
1999 9,173 1,422.9 6,449 1,005.1 1,148 264.0 1,576 153.8
2000 8,853 1,781.6 6,032 1,304.6 1,264 338.0 1,557 139.0
2001 6,296 1,155.8 4,269 838.3 923 204.3 1,104 113.2
2002 5,497 625.0 3,989 450.4 700 85.5 808 89.1
2003 6,169 525.5 4,539 352.8 750 82.0 880 90.7
2004 7,102 855.3 5,140 628.6 822 104.1 1,140 122.6
2005 7,600 996.9 5,463 733.9 977 112.7 1,160 150.3
2006 8,621 1,434.4 6,105 1,015.5 1,142 200.9 1,374 218.0
2007 9,167 1,737.8 6,343 1,151.0 1,343 321.2 1,481 265.5
Source : Mergers & Acquisitions, February 2007.

Another notable feature of the data is the way in which foreign acquisitions of U.S. firms and U.S.
acquisitions of foreign firms seem to rise and fall in tandem. As the rate of U.S. economic growth
slowed in the early 2000s, acquisition activity slowed not only in the United States, but for U.S. acquisitions
abroad as well. Figure 2 and Figure 3 show the number of deals and the value of those deals for U.S.
acquisitions of foreign firms and foreign acquisitions of U.S. firms, respectively. In both cases, the number
of deals and the value of those deals dropped between 2000 and 2002 for both U.S. and foreign firms
before activity rebounded after 2002. Such similarities in the acquisition activity of U.S. and foreign
firms seem to be counter-intuitive in that those forces that draw U.S. firms to invest abroad should
theoretically be separate from those factors that draw foreign firms to invest in the United States.

Number of Deals $Billions
2000 $200
1900
1800
1700 $150
1600
1500
Value ($bil.)
1400
$100
1300
1200
1100
1000 $50
No. of deals
900
800
700 $0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Figure 2 : U.S. Acquisitions of Foreign Companies
Source : Mergers and Acquisitions

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