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Record Foreign Investment in US

June 7, 2000

WASHINGTON (AP) _ Foreign investment in the United States climbed to a record $282.9 billion in 1999, the second consecutive year that merger mania pushed foreign purchases of American companies to unprecedented heights.

The Commerce Department said Wednesday that last year’s total represented a 31.4 percent increase from the previous record of $215.3 billion set in 1998.

Foreign investment in both years was far above anything seen previously. The 1998 figure represented a tripling from the $69.7 billion in foreign investment recorded in 1997.

Much of the activity in both of the past two years represents a boom in telecommunications takeovers as global giants jockey for position in the emerging technologies of wireless telephone and Internet services.

Of the $282.9 billion total spent by foreign companies or their U.S. subsidiaries to purchase or start U.S. firms, $93.5 billion, the single largest amount, came in information companies. That category includes telecommunications and broadcasting firms, which accounted for $80.1 billion of the total. Movie, record and publishing companies are also included in the information category.

The Commerce report did not reveal information about individual deals but it said the information activity involved foreign firms buying U.S. companies involved in telecommunication services, Internet-based information services and the manufacture of fiber optic, Internet and other communications equipment.

Foreign purchases of U.S. manufacturing companies was the second biggest category at $74.2 billion, followed by the acquisition of finance firms and insurance companies at $47 billion.

The Commerce report said the huge increase over the past two years reflected not only a worldwide boom in merger and acquisition activity but the increasing number and size of large deals.

In both years, investments of $2 billion or more accounted for over 65 percent of total outlays. In the previous six years, such large deals never accounted for more than 30 percent of total outlays.

By country, Britain outranked all other nations with $110.1 billion in spending last year in the United States, over half of the $205.2 billion in purchases that came from companies based in Europe.

Asia was far behind with $11.5 billion in foreign investment in the United States to buy or establish companies. Japan accounted for $8 billion of that amount.

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