Foreigners buy stakes in U.S.

Published: Sunday, January 20, 2008 at 6:01 a.m.
Last Modified: Saturday, January 19, 2008 at 8:03 p.m.

Last May, a Saudi conglomerate bought a Massachusetts plastics maker. In November, a French company established a new factory in Adrian, Mich. In December, a British company bought a New Jersey maker of cough syrup.

America is now on sale at discount prices. With credit tight, unemployment growing and recession worries mounting, American business and government leaders are courting foreign money to keep the economy growing. Foreign investors are buying aggressively, taking advantage of American duress and a weak dollar to snap up what many see as bargains, while making inroads to the world's largest market.

Last year, foreign investors poured a record $414 billion into securing stakes in American companies, factories and other properties through private deals and purchases of publicly traded stock, according to Thomson Financial, a research firm. That was up 90 percent from the previous year and more than double the average for the last decade. It amounted to more than one-fourth of all announced deals for the year, Thomson said.

During the first two weeks of 2008, foreign businesses agreed to invest another $22.6 billion for stakes in American companies - more than half the value of all announced deals.

The surge of foreign money has injected tension into a running debate about America's place in the global economy and has reinvigorated worries about foreigners securing control of America's fortunes.

With a growing share of investment coming from so-called sovereign wealth funds - vast pools of money controlled by governments from China to the Middle East - lawmakers and regulators are calling for greater scrutiny to ensure that foreign countries do not gain influence over the financial system or military-related technology.

But foreign investment may be preventing deeper troubles by infusing hard-luck companies with cash and keeping some in business. The influx is the result of a confluence of factors that have made America both reliant on the largesse of foreigners and an alluring place for investors.

"This is a vote of confidence in the American economy, the American marketplace and the American worker,'' said Deputy Treasury Secretary Robert M. Kimmitt. "These investments keep Americans employed and keep balance sheets strong.''

But Leo W. Gerard, international president of the United Steelworkers, said: "We've hollowed out our industrial base and run up this massive trade deficit, and now the countries that have built the deficits are coming back to buy up our assets.''

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