Vodafone's takeover of U.S.
wireless telecoms giant AirTouch shows the global clout of
British firms, which took on their American counterparts as top
cross-border predators in 1998.
The Vodafone deal — valuing AirTouch at around $60 billion
including assumed debt — follows in the wake last year of
British oil giant BP's merger with Amoco, which valued the U.S.
oil firm at $61 billion.
When it began trading earlier this month, BP Amoco had a
market capitalization of some 89 billion pounds ($147.5
billion), making it Britain's largest company and the world's
third largest oil group.
The new Vodafone AirTouch Plc will have a combined market
value of about $110 billion, which the groups said would make it
the third largest publicly-traded company in Britain with more
than 23 million customers around the world.
Corporate Britain — notably utility companies — has long
been a prime target for acquisitive U.S. companies keen to
venture into new markets and take advantage of the liberalized
environment on offer following the privatization and
deregulation programs set in motion by Margaret Thatcher.
But last year the tables began to turn, with Scottish Power
Plc launching a $12.8 billion takeover of Portland-based U.S.
electric utility PacifiCorp in what will become the first
foreign takeover of a U.S. utility if it proceeds.
U.S. utilities invested some 20 billion pounds in Britain
over the past three years, but analysts now believe the flow
could have been reversed.
British electricity transmission group National Grid was
quick to follow on Scottish Power's heels, with a $3.2 billion
cash bid for New England Electric Systems.
Other notable trans-Atlantic deals struck by British
companies during 1998 included the $4.6 billion pound takeover
of the educational businesses Simon & Schuster and Cable &
Wireless Plc's $1.75 billion takeover of MCI's U.S. internet
communications business.
Vodafone's takeover of AirTouch will also spark anticipation
of more so-called mega mergers, with telecoms firms at the top
of the corporate financiers' list as the sector most likely to
see further global consolidation.
Competitive pressures, robust stock markets, the
availability of cheap money and developments such as the advent
of a single currency in Europe mean many corporate financiers
are expecting another bumper year in 1999.
Worldwide mergers in 1998 are estimated by Securities Data
Co to have totaled nearly $2.49 trillion, substantially ahead
of 1997's $1.6 trillion. Many of these were "in-market" —
between firms in the same country — rather than cross-border.
