Foreign buyouts raise US fears as weaker dollar drives deals

 

By Robert Weisman, Globe Staff | October 1, 2007

 

Foreign firms are taking advantage of the weaker dollar to buy US companies at a record pace that is boosting investment here but also raising fears about a potential loss of jobs and autonomy.

 

In New England alone, 69 companies have been sold to foreign buyers in the first nine months of 2007 for a total of $30.8 billion, more than in any full year since 2000, the height of the high-tech boom, according to New York research firm Thomson Financial.

 

"We could be looking at the world's largest tag sale if we continue to see declines in the dollar," said Donald Klepper-Smith, chief economist for the New Haven firm DataCore Partners.

 

Last month, Koninklijke Philips Electronics of the Netherlands snapped up Color Kinetics Inc., a Burlington maker of lighting systems, for $714 million. Analog Devices Inc. of Norwood agreed to sell a pair of cellular product lines to Taiwan's MediaTek Inc. for $350 million earlier this month. Just this week, Australia's United Group Ltd. completed a $411 million purchase of UNICCO Service Co., a Newton company that provides cleaning services for office buildings.

 

When Governor Deval Patrick and a delegation of state and local dignitaries went to Lenox on Sept. 4, they used the traditional Arabic salutation of "Peace be with you" to greet the new owners of one of Berkshire County's leading companies: Saudi Basic Industries Corp., known as Sabic, paid $11.6 billion for GE Plastics of Pittsfield, the biggest overseas acquisition of a regional company in 2007.

 

buyouts are sparking anxiety from New England to Washington, though their impact is complex. Foreign owners typically use acquisitions as an entry into the US market and thus may be more willing than American buyers to invest in their new holdings, some economists say. But the risk is that they might also be quicker to cut back or consolidate US operations when times get tough.

 

"Quite naturally, foreign companies want to play in this market," said Alan Tonelson, research fellow at the US Business and Industry Council, a trade group for small and mid-sized manufacturers. "They want leading-edge technology, and the United States is still the technology leader. But when they buy these companies, they're acquiring control over the most dynamic pieces of the American economy, and they're acquiring control over America's future."

 

Overseas buyouts are just one way the dollar's falling value against foreign currencies is having an impact on New England. The weaker dollar has also drawn European, Asian, and Canadian tourists to Cape Cod and Maine, made it more expensive for Americans to travel abroad, and boosted the exports of regional companies that sell high-tech equipment or medical gear around the world.

 

But foreign acquisitions could become the sagging dollar's most lasting legacy. Nationally, the value of this year's purchases of companies by non-US buyers totaled $257.4 billion as of this week - also a seven-year-high. The figure represents more than 20 percent of the value of all US acquisitions in 2007 through this week

It will be interesting to see the effects if this is a continuing trend.

We're selling our country to the highest bidder, soon we will rely on other countries for everything.

If we can find a way to harness the energy reserves in people, we could build a new industry in America by outsourcing our fat people. Which will be good for me because I have been building my own reserves for a while now.