PARIS, France – The dollar’s fall to an all-time low against the euro is unlikely to spur European companies into mimicking BT Group Plc’s $965 million acquisition of Infonet Services Corp., bankers and analysts said.
The U.S. dollar slipped towards a low of 1.30 to the euro this week, on expectations the re-elected Bush presidency won’t address the U.S. fiscal and trade deficits — and will take a hands-off approach to further dollar depreciation.
The fall prompted speculation European companies may try to take advantage by buying U.S. companies on the cheap. Yet bankers said longer-term considerations were more important than currency moves which may prove short lived.
“Lots of people are very unreceptive to the notion of buying assets on the back of short-term currency fluctuations,” said James Neissa, global co-head of mergers and acquisitions at investment bank UBS. “You may get the asset cheap but you also get cheaper earnings.”
Indeed, the falling value of the dollar also erodes the profit European companies, who report earnings in their home currency, can expect to post from U.S. companies.
For this complete story, please visit Dollar Decline Unlikely to Spur M&A, Bankers Say.
