The British keep up brisk pace in US business takeovers
Traditions -- people don't talk much about them, they just follow them. The British don't make a big deal about investing in the United States -- they just do it. And through almost all of this country's existence they've been investing here.Skip to next paragraph
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But last month a few loud voices were heard from across the Atlantic. They came from Grand Metropolitan Ltd. and Midland Bank, both based in London. Within two weeks of each other, they latched on to major US acquisitions. Grand Metropolitan, an old hand at international investments in the leisure industry and consumer products, bought Pan Am's Intercontinental Hotels -- a $500 million-purchase. The offer seemed to come out of the blue.
Midland Bank, one of London's "big four" clearing banks and the only one that didn't have a fistful of investments in the US, finally heard those golden words of acquisition approval from the Federal Reserve Board. The OK cleared the bank's plans to buy 51 percent of Crocker National Corporation's voting shares. The main business of the corporation is Crocker National Bank, in California.
That acquisition cost Midland $820 million, and moved it from 15th to 10th place among the world's largest banking organizations. Reportedly, it was also the largest foreign banking takeover on record in the US.
With a little jog of the memory, the rumblings of other large British companies can be recalled as they recently made their way along the road of acquisitions: Standard Oil Company (Ohio), 53 percent owned by British Petroleum , buying up Kennecott Corporation, the largest US copper producer, earlier this year; Imperial Group buying Howard Johnson's in 1979; and last year's takeover of Marine Midland Banks Inc. of Buffalo by Hong Kong & Shanghai Bank-ing Company of London.
At the British Embassy, Neville Date, first secretary of trade promotion, calls British investment in the US "a natural evolutionary sequence." With common language, common corporate practices, and common markets, it is continually growing, he says.
The Department of the Treasury has kept track of this growth. In 1980 Britain invested $11.34 billion in the US -- 17 percent of total foreign investment. In 1979 British investment was $9.79 billion -- 18 percent of total foreign investment. Last year the British ranked second in US investments only to the Netherlands. (Many Dutch investments in the US, however, are through holding companies only.) These figures just cover investment money coming directly from the foreign parent.
Greg Fouch, with the US Department of Commerce's Survey of Current Business, says manufacturing is where Britain's "real muscle is." Last year the British poured $4.27 billion into US industry. And in the first half of this year, they have chalked up 38 new entries. Of these, 30 were acquisitions.
David Bauer, director of a foreign investment survey done by the Conference Board in New York, reasons that it's only natural for acquisitions to outweight start-ups. "The British have been doing business with us for so long. Acquisitions require a lot of analysis for firms not active in the US, but the British don't have any trouble with it."