Britain ‘could intervene in Pfizer bid for AstraZeneca’Comment on this story
London - Britain could use its public interest powers to intervene in US drugmaker Pfizer's $106 billion takeover bid for British pharmaceutical company AstraZeneca, Business Secretary Vince Cable said on Tuesday.
Prime Minister David Cameron is facing growing pressure from lawmakers to secure promises about jobs, research and intellectual property from the New York-based company if it pulls off Britain's biggest takeover by a foreign buyer.
“One of our options as the government would be to consider using our public interest test powers. This would be a serious step and not one that would be taken lightly but I'm open-minded about it,” Cable told parliament. Cable's Liberal Democrat party shares power with Cameron's Conservatives.
British law allows takeovers to be blocked if they are held to damage the national interest, but only in some industries.
“We are alive to the national interest considerations in this regard. We see the future of the UK as a knowledge economy, not a tax haven,” Cable said, referring to critics who say the deal may be partly designed to reduce Pfizer's tax bill.
“Our focus is on what is best for the UK: securing great British science, research and manufacturing jobs and decision making in the life sciences sector,” he added.
Just a year before a parliamentary election, Pfizer's 63 billion-pound bid has ratcheted up pressure on Cameron, exposed divisions in his coalition government and drawn criticism from the opposition Labour party, which has implored the government to ensure British jobs are safeguarded.
Pfizer's offer, though rejected by AstraZeneca, dominated Britain's politics on Tuesday, stoking a wider public debate about whether Britain should allow foreigners, albeit from a key ally, to buy up one of the champions of its economy.
“I have a great concern that they will act like a praying mantis and suck the lifeblood out of their prey,” David Barnes, who ran AstraZeneca in the late 1990s, told the BBC.
The possible deal also drew attention elsewhere in Europe, with Swedish Finance Minister Anders Borg telling the Financial Times he viewed Pfizer's pledge to keep AstraZeneca jobs in Britain and Sweden with scepticism after a similar deal in 2002.
“We are worried,” he said. “The experience from Sweden when Pfizer took over Pharmacia was that they made some very strong commitments to research presence in Sweden. We can only come to the conclusion they scaled down and focused on cost reduction.”
The public interest test is enshrined in British merger law and gives ministers the power to intervene in deals, but only for a limited number of reasons, notably national security, media company mergers and for stability in the financial system.
Cable, who cautioned lawmakers about the need to avoid any nationalistic anti-Americanism, said the government must maintain neutral on the takeover and that it was ultimately a matter for shareholders of the two companies.
But in contrast to Cameron or Chancellor of the Exchequer Osborne, Cable, who is seen on the left of his smaller party, went further, pointedly sending a clear message that the government reserved right to intervene if necessary.
“I would certainly rule out intervention on protectionist grounds,” he said. “But I am not ruling out intervention, because we need to look at all the options available to us.”
He has previously said that he was considering all options, including reviewing the terms under which the public interest test could be applied.
Opposition Labour leader Ed Miliband has asked Cameron to make a substantive assessment of any takeover and called on the government to allow a stronger public interest test for takeovers.
Cameron's spokesman told reporters that the deal was a commercial matter for shareholders and that the government would continue to speak with both companies about the importance of research, skills and expanding the workforce's skills.
“Our sole interest here is in securing good jobs in Britain, good manufacturing jobs, good science jobs,” Osborne said when asked by reporters about a possible takeover.
Pfizer aims to create the world's biggest pharmaceuticals company and cut its tax bill as British rates are lower than in its US base. The government is keen to promote Britain's corporate tax regime and has held talks with both companies.
But members of two parliamentary committees - science and business - said there was significant disquiet about the Pfizer bid for AstraZeneca and that binding guarantees were needed to ensure British interests were upheld.
“Are we certain that the national interest has been properly protected?” Andrew Miller, Labour chairman of the parliamentary science and technology committee, told Reuters.
“We want a lot more information,” said Miller.
Parliamentary committees cannot block the takeover.
Pfizer was criticised by lawmakers for a decision three years ago to shut most of its research work at a large R&D centre in Sandwich, southern England, where Viagra was invented, with the loss of nearly 2 000 jobs.
“On the relative merits of the two companies, I do not propose to treat this as a beauty parade,” Cable said.
“But it is fair to say that there have been very substantial redundancies from both companies in recent years, of roughly the same order of magnitude. On the positive side, they are very considerable investors and collaborators.”
Pfizer Chief Executive Ian Read has written to Cameron giving a five-year commitment to complete a new research centre in Cambridge, retain a factory in the northwestern town of Macclesfield and put a fifth of its research staff in Britain.
Britain has been burnt before by foreign takeovers - notably Kraft Foods Group Inc's 2010 acquisition of Cadbury, when the US company promised to keep open a factory, only to change its mind soon after the deal was completed. - Reuters