If a foreign corporation is a "qualifying foreign purchasing corporation" (see requirements under Treasury Regulation 1.338-2) and the target is a "qualifying foreign target", a Section 338 election can be made. Of course, it's only applicable to the extent that the Parent and/or target are subject to U.S. tax. In terms of the treatment of the purchase in the jurisdiction of the foreign parent or the foreign target, you'd have to look at the tax law of that particular jurisdiction to see if it has a provision comparable to Section 338.
Also, to answer a previous training class question, FMV step-up is typically NOT tax deductible. The explanation is actually quite longer but that's the short answer. So yes, u get screwed on taxes AND its worse - you report lower profits bc of FMW step-up.