Trans-atlantic deals

Time to Trade

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U.S. companies are lining up to invest in European firms, as TNT discovered.
  • Why it matters

    Why it matters

    The European Union and United States are currently hammering out a transatlantic trade agreement but many Germans remains skeptical about the deal.

  • Facts

    Facts

    • U.S. firms have made several big purchases in Europe in the past weeks, including FedEx buying TNT.
    • The weak euro means U.S. firms today pay 25 percent less for purchases than half a year ago.
    • Many large U.S. companies are currently making record profits.
  • Audio

    Audio

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The Americans are coming. With his gigantic Berkshire Hathaway conglomerate behind him, legendary investor Warren Buffett is looking for further acquisitions in Europe after purchasing the German motorcycle accessories specialist Louis.

And the logistics company FedEx announced on Tuesday its intention to swallow up its Dutch rival TNT. In the pharmaceutical industry, drug maker Actavis has bought the British company Allergan.

These are just a few examples of the fact that U.S. interest in German and European companies has increased significantly. Motivations for the purchases are highly diverse. But they have one thing in common: They are a positive sign, and we should welcome the buyers from beyond the Atlantic.

These sorts of investments fundamentally support our growth and hence our prosperity as well.

Europe – and Germany in particular – should not wait for the Americans to come, but should actively seek their presence. This is because the prerequisites for U.S. companies to make acquisitions here are more favorable than ever.

It's a sure bet that in the future we will see many more takeovers like that of TNT by Fedex.

U.S. companies are living in a golden age. They have splendid earnings, and many are making record profits. This means that their war chests are filled to overflowing. At the same time, they get more bang for their buck than was the case just a few months ago. Because of the decline of the euro, American companies today pay 25 percent less for an acquisition than was the case half a year ago.

Finally — and this is an argument in the case of the FedEx deal with TNT —U.S. companies have high hopes for the Transatlantic Trade and Investment Partnership, or TTIP, that is currently being negotiated between Europe and the United States. More and more U.S. firms are recognizing that it is a clear advantage to have a footing in Germany or a neighboring country even before the customs barriers are pulled down.

Many American companies — in contrast to German firms — are strongly focused on their domestic market, which is gigantic. It takes them a while to bump up against the limits to their growth. But TTIP will change thought patterns, because it will become easier for U.S. companies to become established and conduct business in Germany. This mental reorientation has already begun. It’s a sure bet that in the future we will see many more takeovers like that of TNT by Fedex.

For these reasons, we should consider the golden age of U.S. companies to be our golden age too. The interest being shown by the Americans not only expresses esteem for our marketplace, but also our many fantastic companies.

The acquisitions should also be viewed in a global context. For years, direct investments by the Americans in Germany and Europe stagnated. We were not at the center of the radar, but were more like a peripheral phenomenon. More and more money flowed into up-and-coming countries such as China and India.

Thanks to the special constellation of TTIP, the euro exchange rate and record profits in the United States, this situation can change at least somewhat. And this would be welcome news for us Europeans.

 

To contact the author: brower@handelsblatt.com

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