An overview of foreign companies in the United States, 1945–2000 1

When I started to write this chapter in the summer of 2000, I read on-line: ‘Terra buys Lycos in $12.5 billion deal’. The Spanish acquirer, Terra Networks, was an Internet provider, an affiliate of the Spanish Cia. Telefónica (which in recent years had become a major multinational enterprise). ² Telefónica was Spain’s largest business (Carreras and Tafunell 1997: 284). In 1997, the state-owned Telefónica had been privatized. It lost its ‘monopoly’ in Spain, and thus Telefónica had diversified its product lines and moved internationally. Terra Networks reflected the new order. Its American target, Lycos, was also an Internet provider, one of the numerous Internet firms that had emerged in the United States in the late 1990s. Headquartered in Waltham, Mass., Lycos had in 1999 sales of $137 million and a loss of $52 million. Its initial public offering had been in April 1996. By the time of the foreign take-over, it was America’s fourth largest Internet portal. Of the three companies participating in this transaction – Tele-fónica, its affiliate Terra Networks, and Lycos – only Telefónica pre-dated the 1990s. When the merger was consummated in October 2000, the value of the ‘deal’ had been reduced to $4.5 billion ( Financial Times 2000c ). What was remarkable about the Terra-Lycos merger was how it reflected the huge sums offered and spent on US acquisitions in 2000 ($12.5 billion and then $4.5 billion – both huge sums – for a firm with $137 million in sales and no profits!). Second, how rapidly values fluctuated. And, third, how indicative the transaction was of the novelties of the new century – the telecommunications revolution, the newly privatized Spanish giant’s expanding into the United States and using its core competence to seek to reach the Spanish-speaking population in the United States through the take-over of a newly formed company in a new industry (Telefónica 2000). In a sense this acquisition captured so much of the contemporary story line – not only in its size, but in its symbolism: new business actors in an increasingly globalized economy, where the United States (albeit internationalized) is central. All participants in the world economy had to be in the United States, whether through new establishments or acquisitions.