Pfizer turns up heat in Astra war

Tuesday 13 May 2014

Pfizer turned up the pressure on AstraZeneca today as the US drugs giant prepares to face a grilling from MPs over its £63 billion takeover plan.

Amid frustration over Astra's refusal to engage in talks, Pfizer outlined its proposals direct to the UK firm's shareholders in a presentation setting out the "strong strategic rationale" for the tie-up. However, new questions have emerged over US firm Pfizer's commitment to maintain UK research and jobs.

The President of the Royal Society, Professor Sir Paul Nurse has written to the Commons Business, Innovation and Skills Committee to express his concerns that Pfizer's commitments are vague and that a five-year pledge to research and guaranteed jobs in the north west of England is insufficient.

Pfizer chief executive Ian Read is likely to be asked about the issue when he keeps his appointment with the committee today. Critics claim the pledges made by Mr Read in a recent letter to the Prime Minister are worthless and are calling on ministers to block any deal.

The board of UK-based Astra has also proved resistant so far to the advances of Viagra maker Pfizer, rejecting its latest offer as "inadequate". Any deal would be the largest-ever foreign takeover of a British company and revives memories of when US food giant Kraft abandoned jobs pledges after its take-over of Cadbury in 2010.

The committee's Labour chairman Adrian Bailey said Pfizer's track record of buying foreign firms and closing them down "gives no confidence that they will deliver on the assurances that we have made".

"We want to try to extend those assurances to give confidence to the country, to the employees and to the scientific community in this country to ensure this country remains a leader in life science development," he told BBC Radio 4's Today.

Mr Read will also be grilled on the extent to which tax advantages were behind the proposed merger, Mr Bailey said.

Pfizer already had "something like £72 billion in foreign accounts not liable to US taxation", he pointed out.

"The last thing we want to do is, as a country, to start adding to that pile with no benefit to ourselves."

Scottish-born Mr Read wrote to David Cameron earlier this month outlining a series of promises should the transaction go through, including a commitment to Astra's planned research and development hub in Cambridge. It also said that 20% of the post-merger research and development (R&D) workforce of the newly-formed pharmaceutical giant would be in the UK.

In its memo to MPs, Pfizer said these five-year commitments were legally binding under the UK's Takeover Code as they were made as part of the formal offer process. However, the letter to Mr Cameron also says that the US company retains the right to "adjust these obligations should circumstances significantly change".