Foreign Direct Investment in the United States. Transactions

Digitized for FRASER
Federal Reserve Bank of St.Louis
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THE MEG APE AT ,S
After an increase in the number of megadeals each year since 1987, when
they first began to be identified separately in this report, the Office of Trade
and Investment Analysis identified a decline in the number of megadeals for
1990. Megadeals are foreign direct investment transactions with a value of
$100 million or more. In 1990, there were 105 megadeal transactions with a
total value of $48.4 billion (Table III), which accounted for 84 percent of the
total value of all foreign direct investment in 1990.
There were 10 transactions in 1990 that had individual values of more than
$1 billion, compared with eight such transactions in 1989. The 14 largest
megadeals were all acquisitions/mergers, as were the top 10 in 1989. In the
largest transaction of 1990, Matsushita Electric Industrial Company of Japan
acquired MCA Inc. for $7.5 billion.
The remaining top 10 transactions were all acquisitions/mergers: the
acquisition of Fireman’s Fund Insurance Company by Allianz AG of Germany
for $3.3 billion, the acquisition of 60 percent of Genentech Inc. by Hoffmann
LaRoche of Switzerland for $2.1 billion, the acquisition of Norton Company
by Compagnie de Saint Gobain of France for $1.9 billion, the merger of the
pharmaceutical operations of Rhone-Poulenc of France with Rorer Inc. into
a new company (with Rhone-Poulenc owning 68 percent) for $1.7 billion, the
acquisition of 20 percent of McCaw Cellular Communications Inc. by British
Telecommunications PLC for $1.5 billion, the acquisition by France’s Michelin
of Uniroyal/Goodrich Tire Company for $1.5 billion, the acquisition of
MGM/UA Communications Company by Italian businessman Giancarlo
Parretti for $1.4 billion, the acquisition of the Motel 6 chain by Accor SA of
France for $1.3 billion, and the acquisition of American Home’s Boyle-
Midway division by Reckitt and Coleman PLC of England for $1.3 billion.
In 1990, the three major source countries for foreign direct investment were
Japan, the United Kingdom, and France, accounting for 68 megadeal
transactions, 65 percent of the total. Japanese investors concluded 36
megadeals; British investors had 21, while French investors had 11. In
addition, German investors had seven megadeals, Swiss investors had five, and
Italian and Swedish investors had four each.