Britain's $200bn leads global takeover boom

British companies are spearheading a global mergers and acquisitions boom, investing more abroad last year than any other country, new figures showed yesterday.

Britain accounted for $199.3bn (£138bn) of cross border investment, replacing the United States as the largest outward investor for the first time since 1988.

The huge deals which helped to push Britain to the top of the list included Vodafone's $60bn purchase of AirTouch and BP's $48bn takeover of US oil company Amoco, according to figures, compiled by the United Nations conference on trade and development (Unctad).

A wave of M&A activity drove total cross-border investment flows to a record high of $800bn (£545bn) in 1999, an increase of 16% on 1998.

Britain and the US were also the principal host countries for so-called foreign di rect investment, often from each other's companies

America attracted a record $276bn last year. Britain brought in $82.2bn of investment, also a record, which confirms that failure to join European monetary union has not reduced the country's popularity with foreign investors.

Britain's nearest rival in the EU was Sweden followed by France and the Netherlands.

Unctad said cross border M&A activity, including the purchase by foreign investors of state-owned enterprises, was driving the huge increase in foreign investment flows which it reckons could hit a trillion dollars this year.

"A global marketplace for firms is emerging," said Karl P Sauvant, chief author of the re port. "Companies are being bought and sold across borders on an unprecedented scale."

The value of completed cross border M&As totalled $720bn and involved about 6,000 separate transactions.

However, 109 mega-deals of more than $1bn accounted for 60% of the total. Most of these took place in the developed world.

Unctad's Gabriele Kohler said that at the firm level, foreign investment decisions were based on a desire to expand market share in an increasingly integrated global economy. "It's quick way of accessing productive capacity," she said.

Cross-border mergers had also been boosted by technological change, deregulation and by the growing tendency for mergers to be financed through stock-swaps rather than cash.

"This option is frequently used in deals where the sheer size makes cash payment virtually impossible," said Unctad.