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Last updated: May 10, 2014 12:51 pm
Pfizer has launched a fight back against critics of its proposed £63bn takeover of AstraZeneca but did not make any fresh promises on jobs or investment despite pressure from the UK government for stronger commitments.
Instead, Pfizer reiterated its intention to keep a big presence in the UK and said the deal would be a “win-win” for shareholders and patients.
The comments from Ian Read, Pfizer chairman and chief executive, signalled an attempt to get back on the front foot after a week in which the proposed takeover has faced mounting resistance from politicians and scientists.
In a video statement on Saturday, Mr Read said the strength of AstraZeneca’s UK-based science and its plan to build a new research centre in Cambridge was one of the main attractions for buying the company.
“By combining these two companies we . . . strengthen the ability to bring products to patients,” he said. “I see this as a win-win for society, a win-win for shareholders, and a win-win for stakeholders.”
Pfizer has promised to keep 20 per cent of the two companies’ combined research workforce in the UK for at least five years after a merger, but critics have highlighted the company’s record of making big cuts to R&D after previous takeovers.
George Osborne, UK chancellor, on Saturday said he would take a “hard-nosed” approach to any deal. “We have to make sure those are real promises that we can hold them to,” he told BBC Radio 4’s Today programme. “My only interest in the potential bid that Pfizer might make for AstraZeneca is securing good British jobs and good British science.”
As Ian Read, Pfizer chief executive, prepares to fly to London to face a grilling from UK lawmakers next week, Andrew Ward assesses the story so far and asks where it will go next.
Mr Read is due in London on Tuesday and Wednesday to be quizzed by UK lawmakers in separate hearings by parliament’s business and science committees.
In his video statement, he said: “When we looked at AZ, we liked their science. We liked where their science is being done, which is in the UK, and we know we have good science in the UK in the Cambridge, Oxford, London and other universities.”
David Cameron, prime minister, this week floated the possibility of expanding government powers to subject the proposed deal to a “public interest test” but Mr Osborne on Saturday said the UK must remain an open economy.
“We have benefited enormously from foreign companies like Tata coming in and turning around our car industry or Nissan creating its cars in the north east of England,” he said. “AstraZeneca itself, of course, is a British company that grew by taking over foreign companies.”
Mr Read admitted there would be cuts in some parts of the two companies, but said this would be good for society as well as shareholders by increasing efficiency.
“Governments are all around the world pressurising the industry to produce products of higher value and with more productivity, at lower cost,” he said. “One way of doing that is to consolidate and is to take out overlapping functions.”
Political scrutiny of the proposed deal has spread across the Atlantic in recent days with some Democrats on Capitol Hill critical of Pfizer’s plan to shift its tax domicile to the UK to escape higher rates in the US.
Mr Read said tax and cost savings resulting from the merger would allow the company to invest more in science.
Mr Osborne told the BBC that the UK’s so-called patent box tax break that Pfizer has cited as an incentive for buying AstraZeneca would only benefit the US company if it was “generating real intellectual activity in the UK”.
AstraZeneca, Britain’s second-biggest pharmaceuticals company, has so far refused to enter talks over what would be the biggest foreign takeover in UK history.
Pfizer’s £63bn offer for AstraZeneca, if successful, would create the world’s biggest pharmaceuticals group and represent the largest foreign takeover of a UK company
However, there is widespread expectation among investors that Pfizer will return with an improvement on its latest £50-per-share cash and stock proposal before the May 26 deadline for it to make a firm bid.
Mr Read said the deal would allow AstraZeneca shareholders to “get an immediate benefit from the cash that we would pay them, it allows them to participate in a very strong combined company with great cash flows and great portfolio, and it allows a very efficient allocation of capital by my company.”
Dismissing concern from AstraZeneca over the risks involved in such a big takeover, Mr Read said he thought it would be “easy” to integrate the companies’ research operations.
His statement came a day after Pfizer announced a research partnership with several top UK universities to hunt for cures to rare diseases. The tie-up, with scientists from Cambridge university, Imperial College London, King’s College London, Queen Mary University London, University College London and Oxford university, was portrayed by Pfizer as further evidence of its commitment to UK science.
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