Cross-Border M&A Between U.S. And European Firms At 10-Year High

by: Lipper Alpha Insight

By Pamela Barbaglia

Some $171.8 billion of cross-border merger & acquisition deals between U.S. and European companies have been announced so far in 2017, the highest figure at this stage of the year for a decade as companies on both sides of the Atlantic hunt for deals to offset sluggish growth.

A $14 billion tie-up between U.S.-based chemicals firm Huntsman Corp. (NYSE:HUN) and European rival Swiss Clariant AG (OTCPK:CLZNF), announced on Monday, is the latest example of the spate of big deals between the two regions.

The overall value of cross-border M&A deals between the U.S. and Europe is up 82 percent on the same period last year, according to Thomson Reuters data, and the highest over the same time frame since at least 2007.

(Source: Thomson Reuters Deals Intelligence)

Interest in major cross-border deals was underscored earlier this year when Kraft Heinz Co. (NASDAQ:KHC) made a surprise $143 billion bid for Unilever (NYSE:UL), only to withdraw it less than 48 hours later, while U.S. healthcare giant Johnson & Johnson (NYSE:JNJ) clinched Swiss biotech company Actelion (OTCPK:ALIOF) in a $30 billion all-cash deal.

Optimism over U.S. President Donald Trump's economic agenda has buoyed stock markets worldwide, as well as the U.S. dollar, which has made foreign acquisitions cheaper for U.S. companies. Low interest rates are also keeping down borrowing costs.

Switzerland and the Netherlands have so far been the main shopping destinations for companies on the other side of the Atlantic, with U.S. buyers announcing a combined $70.2 billion worth of deals in those two countries this year, the data shows.

But some European companies have been fighting hard for their independence.

Shareholders in Dutch paint maker Akzo Nobel (OTCQX:AKZOF), angered by its rejection of a 26.3 billion euro ($29.6 billion) takeover proposal from U.S. rival PPG Industries (NYSE:PPG), took its fight to an Amsterdam court on Monday.

Britain remains Europe's biggest acquirer in the United States, with deals totalling $21.1 billion so far this year, followed by Switzerland with $11.5 billion.

In February, Reckitt Benckiser (OTCPK:RBGPF) announced a deal to buy U.S. baby formula maker Mead Johnson Nutrition (NYSE:MJN) for $16.6 billion, giving the British consumer goods company a new product line and expanding its presence in developing markets where Mead Johnson has a strong footprint.

Bank of America Merrill Lynch, which advised Reckitt Benckiser on that deal, leads the list of financial advisers on cross-border transactions announced between U.S. and European companies, with $83.1 billion worth of deals so far this year. That represents 48 percent of the total, according to Thomson Reuters data.

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