Political row looms as Pfizer goes public with £62bn AstraZeneca deal
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.
Tuesday 29 April 2014
Pfizer’s ambitions to take over Britain’s AstraZeneca for nearly £62bn looked set to trigger a political crisis for the Government after the United States giant refused point blank last night to safeguard British jobs.
The takeover plot, confirmed for the first time by Pfizer yesterday, was being talked of in similar terms to the deeply unpopular sale of Cadbury Schweppes to Kraft of the US, which saw the American buyer renege on a promise not to close a major plant in the UK shortly after the deal was done.
As in the original bid for Cadbury Schweppes, the target, AstraZeneca, quickly rebuffed the first offer, declaring it “significantly undervalues AstraZeneca and its prospects” but City analysts are expecting the Viagra-making predator will come back with a higher one.
Pharmaceuticals are Britain’s biggest export after machinery and cars, and the industry has been identified by the business Secretary, Vince Cable, as a key strategic area for support in the economy.
But in terms of industrial relations, Pfizer is best known in Britain for the closure of its huge plant in Sandwich, Kent, with the loss of 2,400 jobs in 2011.
In an attempt to face off a potential political backlash, Pfizer executives have contacted the British government with assurances about their investment plans.
Pfizer also said yesterday the combined company would be domiciled in the UK, because the lower tax regime is more attractive than that of the US.
But the scientific community was unconvinced. Sarah Main, director of the Campaign for Science and Engineering, said: “AstraZeneca and GlaxoSmithKline are the two pillars of the UK’s thriving and economically important life sciences sector, supporting biotech and academia across the science base. To lose one of them to foreign ownership would be a blow.”
Unions also spoke out against the deal, and Labour took an initially sceptical view, demanding the deal should only be allowed to proceed if it came with guarantees of long-term investment in the UK.
Pfizer’s chairman and chief executive Ian Read was quick to respond to the growing concern, saying his company had held “preliminary discussions” with the Government.
“We want to have a conversation with the Government about the excitement we have about combining these portfolios, the excitement we have about the strength of UK research.
“This combination, if it occurs, would create, domiciled in the UK, the largest pharmaceutical company in the world and would bring an injection of about $100bn (£59bn) into the UK economy,” Mr Read said.
So far, the Coalition has distanced itself from the deal.
The Chancellor, George Osborne, on Friday dismissed the issue as “a commercial matter between the companies”. One of its main plants, Alderley Park in Cheshire, is in his constituency.
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