Posted: August 1, 2013 |  AUTHOR: KEN FOX | CONTACT ME

 

Foreign companies are increasingly buying U.S. companies. It started with the shocking news of the U.S. iconic Anheuser-Busch being sold to the Belgian based InBev in July 2008 for $52 billion U.S. dollars (33 billion Euros).

And continuing with Italy’s Fiat SpA buying 63% of the Chrysler Group (Chrysler, Dodge and Jeep brands) with plans to acquire the remaining part of the business from other parties. Fiat took control of Chrysler after the latter emerged from U.S. bankruptcy in 2008.The UAW (United Auto Worker) Retiree Medical Benefits Trust, which provides health-care to Chrysler’s retired workers, owns a 41.5% stake in Chrysler that Fiat does not own. The selling price for the remaining part of Chrysler is estimated to be between $1.75 and $4.27 billion U.S. dollars. The final price is pending a court decision expected in the second half of 2013. One remaining question is what to call the newly merged company. Will it be Fiat or something else?

Other more recent acquisitions of U.S. companies or properties are as follows:

*Shuanghui International also goes by the English name, Shineway Group
**Techtronic Industries already owns the Hoover vacuum brand

Besides companies, Asian investors are on the hunt for U.S. real estate properties. According to the Wall Street Journal:“In what would be one of the largest U.S. property deals since the financial crisis, a group of Singapore investors is in advanced talks with Houston based Hines to revive a stalled luxury condo development connected to New York City’s Museum of Modern Art.”

Another example is India’s Sahara Group (Sahara India Pairwar) which spent $570 million U.S. dollars to buy a 75% controlling interest in New York’s Plaza Hotel from El Ad Properties, an Israeli based real estate developer (in November 2012).

The Plaza Hotel, New York, USA

South Korea investors are looking to acquire U.S. resorts, commercial and residential properties in cities and states including: Hawaii, Chicago, Miami (Florida) and New York.

Commentary
Reasons for strong interest in buying U.S. assets by foreign companies range from favorable exchange rates (the InBev purchase), the increased number of Chinese billionaires (AMC) and the wide range of property choices (Sahara Group). However, other drivers include country deficiencies or needs such as Mindray’s purchase of Zoneaire Medical, as China plans to increase the number of hospitals to help meet its goal of improved healthcare for its large and aging population.

This review and knowing that all former, major U.S. beer companies, for example, have been acquired by foreign entities, begs the question of which U.S. iconic company will be next? Asian and Pacific Rim companies showing strong growth are likely buyers. I remember the French government blocked The Coca-Cola Company from acquiring their Orangina beverage brand. Should or will the U.S. government more often stop foreign acquisitions for security or non-security reasons? The Smithfield Foods acquisition may represent a test case. Both Smithfield Foods and its acquirer have agreed to submit the acquisition for review by the U.S. Committee on Foreign Investment. “This committee is concerned with acquisitions that involve technology or vital natural resources.” Some U.S. industry officials are already questioning the U.S. loss of homegrown Smithfield Foods and concern about China exporting locally produced pork to the U.S. Smithfield and Shanghui International claim the opposite, saying the purpose of the acquisition is to increase U.S. exports to China. The acquisition is still pending final clearance. It does not seem like pork represents a U.S. national security threat or vital resource to me.

*Shuanghui International also goes by the English name, Shineway Group

Resources:
1. Needing Pork, China is to Buy a U.S. Supplier, New York Times, May 29, 2013
2. Fiat Parent Sells Asset Ahead of Chrysler Buy, Wall Street Joutrnal.com, June 3, 2013
3. India’s Apollo Tyres to Buy Cooper Tire for $2.5 billion, Reuters.com, June 12, 2013
4. Mindray to Acquire ZONEAIRE Medical Systems, Fierce Medical Devices, June 13, 2013
5. Asian Buyers Dig into U.S. Property, Wall Street Journal, June 25, 2013
6. Sahara Buys 2 Iconic New York Hotels, The Times of India, November 28, 2012
7. Hudson’s Bay to Buy Saks for $2.4 billion, Wall Street Journal, July 29, 2013

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©2017, The Global Galaxy blog is produced by The Soundings Group, LLC, Charleston, South Carolina, USA, www.thesoundingsgroup.com. The company is an international business consulting firm, specializing in new market assessments, market entry strategies and marketing guidance. The scope of Global Galaxy is to cover timely international trends, issues and business building ideas. Its purpose is to educate, inform and stimulate thinking for business opportunity analyses.

 

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