Pfizer's backer Sir Richard Sykes has been wrong before on drugs firm deals
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Thursday 08 May 2014
Outlook As any salesman will tell you, there's nothing like a testimonial to convince a potential buyer. Which is why the highly paid executives Pfizer has hired to flog its takeover of AstraZeneca have found two cheerleaders (only two, mind) to recommend their offer. Both are quoted at length on Pfizer's page-long sales pitch posted on its website.
One is Ian Read. He says the merger would see the two companies' operations in Oxford, Cambridge and London retain their "Golden Triangle" status and be a key part of the combined global business. But Mr Read is the chief executive of Pfizer, so his views are perhaps biased.
The other is Sir Richard Sykes, the former chairman and chief executive of GlaxoSmithKline. Sir Richard describes the merger as a "fantastic opportunity to work in a country with a scientific background". At least, the presentation makes it look like that's what he said. In fact, reading the small print, he seems to have been talking in more general terms about the UK. But hey, that's advertising.
The copywriter's sleight of hand aside, Sir Richard has been one of the few big guns in industry to commend the takeover. Other dignitaries, from Sir Michael Heseltine to Lord Sainsbury, have been vehemently opposed. So Sir Richard is to be applauded for having the guts not to go with the flow. For standing up against the noisy consensus.
It wasn't so, though, when he was chief executive of Glaxo Wellcome and brought his company into the arms of SmithKline Beecham in 2000. That deal, which also created the world's biggest drugs company, ended up being one of the most value destructive, not to mention job destructive. But at the time, Sir Richard trumpeted its "unbelievable financial power" and "vision".
A few years later, when the deal was looking like a flop, Sir Richard admitted he was railroaded by the clamour of investment bankers and fund managers demanding it. Actually, he disclosed, he never really wanted a merger at all. He even penned a report concluding "growth for growth's sake via takeovers has been a prime cause of shareholder value destruction".
Pfizer argues, of course, that this is not just a deal about "growth for growth's sake". It's about avoiding US taxes too.
But let's put that multi-billion dollar tax bonus to one side. Pfizer highlights other selling points: the deal will, it says, "speed development of treatments". Unlikely: scientists fear the merger will disrupt funding of potentially successful projects and disband close-knit research teams.
It talks of how the deal will "deepen research efforts". AstraZeneca employees read that as "merge R&D teams". No thanks.
It says it will strengthen areas like oncology. Translation: "give Pfizer shareholders a chunk of the benefits of AstraZeneca's cancer breakthroughs."
Note to the Coalition leaders: it wasn't just Sir Richard who called the Glaxo deal wrong in 2000. MPs on the Science Select Committee gave it a ringing endorsement, too. Many scientists didn't. They said from the start that merging Glaxo and SmithKline was a pointlessly risky exercise.
Now, they seem to think this deal is crazy too. Perhaps we should take notice.
- 1 National Orgasm Day: Six reasons (plus one bogus one) why they're good for us
- 2 The 'world's most beautiful vagina' has been debunked by science
- 3 John Green schools morning show hosts after awkward interview with Cara Delevingne
- 4 Doctor Who: Christopher Eccleston says why he left the BBC series after just one series
- 5 'Rowdy' Roddy Piper dies: Wrestling legend dies aged 61, according to reports
What turns someone into a conspiracy theorist? Study to look at why some are more 'receptive' to such theories
Whoopi Goldberg tells Cara Delevingne to suck it up: 'She's not famous. I'M famous'
John Green schools morning show hosts after awkward interview with Cara Delevingne
Supermodel Gisele Bundchen mocked for wearing a burka to avoid being seen visiting plastic surgeon in Paris
'Rowdy' Roddy Piper dies: Wrestling legend dies aged 61, according to reports
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn – or a return to a Labour government
Labour leadership contender Jeremy Corbyn says 'we can learn a great deal from Karl Marx'
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Public anger after French sunbather beaten up by gang for wearing a bikini in Reims park
Labour leadership: New poll shows party is now even 'less electable' than under Ed Miliband
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...
£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...
£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...
£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...