Unseating U.S., Britain lifts Europe to first place in corporate takeovers

FRANKFURT, Germany - Europe is the world's hot spot for mergers and acquisitions, led by Britain, which unseated the United States for first place in buying out foreign companies last year, an economic policy group reports.

Worldwide, the number of cross-border mergers jumped 50 percent in 1999 with nearly three-quarters of the deals in Europe, according to the Paris-based Organization for Economic Cooperation and Development.

Britain accounted for nearly a third of the world's merger and acquisition value, including such deals as Vodafone's $56 billion telecommunications buyout of U.S.-based Airtouch.

All told, British firms shelled out $246 billion to take over foreign companies, blowing by the United States at $145 billion to capture the top-spending spot. Germany placed third among the 29 nations surveyed, followed by France.

The United States has held the top spot at least since 1996, the OECD reported Tuesday.

The number of mergers worldwide totaled just over 5,000 last year, with European suitors accounting for more than half. Many of the 10 most valuable deals featured European companies.

They include BP Amoco's $27.6 billion takeover of U.S.-based Atlantic Richfield Co., Germany's Mannesmann buying Britain's Orange telecommunications for $35 billion, and the merger of Germany's Hoechst and France's Rhone-Poulenc to form the pharmaceutical company Aventis.

AstraZeneca, another of the world's largest drug companies, was formed in April 1999 when Astra of Sweden merged with Britain's Zeneca.

''This is just the beginning of a boom in European mergers and acquisitions,'' said Fred Irwin, president of the American Chamber of Commerce in Germany.

Mergers across the region were fueled by withering regulations, European monetary unity, increased public acceptance of hostile takeovers and stepped up privatization of government-owned companies.

Cutthroat international competition and the need to squeeze out savings by merging into bigger companies and paring down overlapping operations also contributed to the trend.

Economists say there's also a defense mentality at play - merge or be merged.

Over the last 10 years, merger and acquisition activity rose fivefold worldwide, with telecommunications and chemical industries seeing most of the action. In 1999, the countries in the survey spent a total of $767 billion buying up foreign companies.

The United States remained the most popular place to buy, with other countries sinking $293 billion into buying its companies. Britain was a distant second, with foreigners spending $123 billion on its soil.