It’s always nice to be in demand, and AstraZeneca shareholders are certainly feeling wanted. An offer of £50 a share for their company from the American giant Pfizer values the British firm at £63bn, not that far behind its would-be predator. Quite a compliment.
AstraZeneca is a world-class pioneer, and has a very promising “pipeline” of new drugs. It is, therefore, not only a British asset but a global one, promoting the health of mankind. Clearly, Pfizer finds all this an attractive package, and has made all sorts of pledges about its good intentions should it take custody of this national asset. The new AstraZeneca/Pfizer would have its European HQ in the UK, expand its research and development activities here, and jobs and dividends should be more secure.
If only. The vagaries of the US tax code mean that at least one other powerful motive behind the Pfizer bid is its need to find somewhere to blow its cash pile – rather than repatriate it to America. Were it to do so, it would face a large bill from the Internal Revenue Service, and, true to form for a large transnational corporation, it seems to have no inclination to fund the activities of any government. Then there are the pledges. Well, we have the testimony, which we report today, of a former head of Pfizer’s research arm who alleges his old company is liable to mess up AstraZeneca’s efforts, and would make a far from ideal custodian of the laboratories: a powerful piece of evidence that ministers must investigate.
Moreover, we have the unhappy experience of the Pfizer closure of its UK research operations in Sandwich a few years ago. As we saw this week in the case of the “long-term” investors who promised to hang on to their Royal Mail shares but who sold them within weeks, if not hours, of them being allocated, such pledges should have a hefty discount applied to them.
It is also not so very long ago that Kraft reneged on an apparently sincere promise to keep a Cadbury’s plant in Bristol open. No foreign concern buys a British firm and publicly admits the truth– namely, that it cannot foresee the future and that it cannot be held to any promises it might make if only for that reason. To take an older example, when Peugeot took over some UK car factories in 1978, it could not say that, by 2007, it would find it cheaper to close a factory in Coventry than in France.
The AstraZeneca/Pfizer deal will offer opportunities to integrate operations across boundaries. Some moves may benefit the UK; others may not and we could find our science base denuded and jobs lost. Do we have to take the risk?
Just as even Tories now accept there is “such a thing as society”, so we are rediscovering the “national interest”. It used to be thought that “ownership didn’t matter”. Yet, as Lord Heseltine has repeated, in a world where other countries shamelessly pursue economic nationalism, there is no harm in British ministers taking a view on mega-deals with mega-high stakes.
Britain should be proud its economy is open to the world, and this deal could conceivably strengthen important industries. But ministers have a duty to scrutinise it thoroughly before they can recommend it is in the national, long-term interest.Reuse content