The value of cross-border mergers and acquisitions (M&As) completed in 2000 grew by nearly 50% to US$ 1.1 trillion, according to statistics compiled by UNCTAD(1).
Cross-border M&As have been a driving force behind the recent growth in foreign direct investment (FDI) flows. The bulk of them take place among developed countries (table 1). In developing countries, cross-border M&As still account for a relatively small share of FDI flows, mainly comprising privatizations (particularly in Latin America) and, recently, purchases of Asian firms in the countries affected by the financial crisis. Last year, cross-border M&As in Latin America and the Caribbean remained high, while those in South, East and South-East Asia declined. Cross-border M&As in Central and Eastern Europe nearly doubled, essentially through privatizations.
The United States continues to be the country with the single largest value of sales. Because of the conclusion of the US$ 200 billion acquisition of Mannesmann (Germany) by Vodafone AirTouch (United Kingdom), Germany last year became the second largest seller in cross-border M&As, replacing the United Kingdom. On the purchase side, however, the United Kingdom was the largest acquirer for the consecutive second year. The value of acquisitions of Japanese firms by foreign firms remained at almost the same level as in 1999.
Large cross-border M&As can easily change the volume and direction of FDI flows, as shown by the fact that the number of megadeals (M&As worth more than US$ 1 billion) increased from 114 in 1999 to 175 in 2000, with their share in the total value rising from 68% to 76%.
The World Investment Report 2001, to be released this September, will provide detailed data on cross-border M&As for 2000.
