GS: Falling Dollar Could Sink Cross-Border M&A (Bloomberg)


““Dollar depreciation generally coincides with declining cross-border M&A activity, and vice versa,” Goldman Sachs Group Inc. strategists led by Lotfi Karoui wrote in a note on Wednesday. “While the correlation is only modestly positive, it is somewhat counterintuitive.”

Investors often believe a weaker dollar will stoke M&A activity as American companies look cheaper to potential foreign buyers, the strategists said. But their analysis of U.S.-Europe deals shows the opposite is true. The reason: a strong dollar typically reflects robust growth in the U.S. relative to Europe, which in turn fuels interest from strategic buyers. ”

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