An infusion from afar

Foreign investors ramped up purchases of U.S. companies in the fourth quarter to the fastest pace in at least a decade, a reflection of the falling value of the dollar.

Buyers from Dubai to the Netherlands accounted for 46 percent of the $230.5 billion of U.S. mergers and acquisitions announced in the last quarter of 2007, the largest portion since 1998 when Bloomberg News began compiling the data.

The influx of overseas buyers cushioned a drop in domestic deals, as tighter credit markets ended the leveraged-buyout boom that spurred record-setting takeovers in the first half of 2007. Foreign acquirers, who stepped in as the dollar fell 10 percent against the euro last year, show no sign of losing interest, according to bankers and lawyers.

"In 2006 and the first half of 2007, it was cheap financing that allowed [U.S.] private-equity firms to compete," said Lee Lebrun, head of mergers and acquisitions for the Americas at UBS AG.

Now, he said, "foreign corporates with strong currencies" dominate the buyout field.

The dollar declined to $1.4967 per euro Nov. 23, the lowest since the euro's introduction in 1999. It closed yesterday at $1.4763.

"With the dollar being valued the way it presently is, basic economics should lead us to expect continued strong foreign investment in the U.S.," said Frederick Green, co-head of U.S. mergers and acquisitions at New York-based Weil, Gotshal & Manges L.L.P.

The fourth quarter's biggest transactions included Toronto-Dominion Bank's proposed takeover of Commerce Bancorp Inc. of Cherry Hill, N.J., for $8.5 billion, and the $8.1 billion planned purchase of Chicago-based Navteq Corp. by Finland's Nokia Oyj, the world's biggest maker of mobile phones.

Another deal pending is the $850 million purchase of chocolate-maker Godiva from Campbell Soup Co. of Camden, N.J.

In 2007, non-U.S. buyers avoided the political controversy that plagued Dubai-owned DP World in 2006, when it added six U.S. port terminals with the purchase of London-based Peninsular & Oriental Steam Navigation Co. U.S. lawmakers, including Sen. Charles Schumer (D., N.Y.), said Dubai's ownership of the port operations could threaten U.S. national security, forcing DP World to sell them to American International Group Inc.

"In a post-Dubai Ports world, you've had two years that turned out to be record years for U.S. foreign investment," Washington attorney Ivan Schlager said. "It really dispels the idea that the U.S. was turning inward - 2008 will shape up to be probably an even bigger year."

Schlager is advising Nasdaq Stock Market Inc. in a transaction that will result in Borse Dubai owning a minority stake in the electronic exchange. It won approval this week from the Committee on Foreign Investment in the United States, which reviews purchases on national-security grounds.

Foreign companies were the buyers in $105.3 billion of the $230.5 billion of U.S. purchases in the quarter, Bloomberg data show. Overseas acquirers have accounted for just 18 percent of U.S. deals per year on average since 1998.

Some of the biggest U.S. merger advisers have themselves turned to foreign investors during the last three months to shore up capital depleted by losses on subprime-mortgage loans.

Citigroup Inc., the biggest U.S. bank, raised $7.5 billion from Abu Dhabi's sovereign wealth fund, for example. Firms controlled by China invested $5 billion in Morgan Stanley and $1 billion in Bear Stearns Cos., and Merrill Lynch & Co. Inc. got $4.4 billion from Singapore's government-run fund, Temasek Holdings Pte Ltd.