Figures that point to an increase in merger and acquisition activity the past few months might seem to indicate that the credit crunch is easing and Wall Street is starting to return to a more normal business cycle.
But when one considers that recent headline-grabbing deals have mostly involved foreign companies bidding for industry icons like Genentech Inc. and Anheuser Busch Cos., such an optimistic view might be visible only through a pair of “beer goggles.”
In reality, the rise in M&A, like recent investments in other U.S. industries such as financial services and real estate, likely reflects foreign companies taking advantage of the weak dollar than it does a loosening of credit.
Announced U.S. merger and acquisition volume in July jumped to $186.99 billion, the fifth straight month of growth and highest total since a year ago, according to the firm, Dealogic.
In addition to M&A, billions have flowed from the Middle East, China, South Korea and Singapore into U.S. financial firms to keep them afloat, and billions more into U.S. real estate as investors have bought icons like the Chrysler Building.