Transcripts

The Acquisition of America

PAUL KANGAS: In other drug news, Swiss drug maker Roche is buying 44 percent of Genentech (DNA) it doesn't already own. The $44 billion deal is the latest example of overseas firms targeting U.S. corporations, a big trend in recent merger and acquisition activity. Suzanne Pratt takes a look at why America seems to be "on sale." SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The weak U.S. dollar makes America an appealing vacation destination for foreign tourists. But for much of the world, the sagging greenback also puts U.S. companies on sale. Today, it was Roche Holdings multibillion-dollar bid for Genentech. Last week, Belgian brewer InBev struck a deal to buy the maker of Bud, Anheuser-Busch (BUD). Lehman Brothers M&A chief Mark Shafir says the dollar's decline is encouraging international marriages, but for many companies, the push to be a global player is paramount.

MARK SHAFIR, CO-HEAD OF M&A, LEHMAN BROTHERS: I think it's more fundamentally the strategic interests of these parties. And by that I mean globalization is really driving a lot of markets. This is still the biggest market for most companies, and as a result, you know, they are making moves here.

PRATT: According to Standard & Poor's, last year foreign buyers set a record by purchasing $422 billion of U.S. assets. Many of those deals involved sovereign wealth funds. So far this year, there have been more $200 billion in announced deals with foreign buyers, and seven of the top 20 U.S. mergers this year involve foreign buyers. M&A expert Rich Peterson says foreign players are helping to keep the takeover business alive.

RICHARD PETERSON, DIRECTOR, STANDARD & POOR'S: Here we are in a bear market, nine months into a bear market, and we're seeing strong M&A activity.

PRATT: Experts say the rattled U.S. stock market is also fueling the shopping spree, making publicly traded U.S. companies even more attractive to overseas buyers. Wachovia Securities market strategist Scott Wren says foreign companies are looking to better position themselves for when the U.S. economy recovers.

SCOTT WREN, SR. EQUITY STRATEGIST, WACHOVIA SECURITIES: I think what's really mainly driving foreign investment-- and they are certainly taking advantage of a weaker dollar-- is just that the growth prospects here in the United States are good. The United States still accounts for almost 25 percent of global GDP. We're a market that foreigners want to be in.

PRATT: Foreign buyers are expected to continue to take advantage of the opportunities provided in the U.S. marketplace. Some experts predict this year we could see a new record set for international purchases of American companies. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.