The growth in FDI flows was also driven by cross-border M&A activity (figure I.5), which expanded in scope across countries and sectors. Its strong growth and a record number of mega deals (i.e. deals with a transaction value of over $1 billion) (table I.2) pushed the value of total cross-border M&As to a record $1,637 billion in 2007 (annex tables B.4 and B.6) – 21% higher than even the value in 2000 (figure I.5).
The number of such transactions grew by 12% to
10,145 (annex tables B.5 and B.7). While the value
of cross-border M&As does not exactly match the
value of FDI flows, due to different data collection
and reporting methodologies (WIR00), UNCTAD's
revamping of its database and redefining of "crossborder"
(box I.1) should improve the relevance of
these data from an FDI perspective.
In addition, large TNCs in most industries
remained in good financial health, reporting rising
profits. In the financial industry, however, liquidity
problems of several transnational banks spurred
further consolidation, with participation by a number
of sovereign wealth funds (SWFs). Meanwhile, the
number of greenfield FDI projects decreased from
12,441 in 2006 to 11,703 in 2007 (annex tables A.I.1-
A.I.2)
Overall, the financial
crisis that began in the second
half of 2007 in the United
States sub-prime mortgage
market did not exert a visible
dampening effect on global
cross-border M&As that year.
The largest deal in 2007, and
the largest in banking history -
the acquisition of ABN-AMRO
Holding NV by the consortium
of Royal Bank of Scotland,
Fortis and Santander through
RFS Holdings BV – took place
in late 2007. This period also
saw other major mega deals,
including the second largest.
