The battle to control one of the UK’s leading pharmaceutical giants has intensified after US firm Pfizer upped its bid to £50 a share, valuing AstraZeneca at a colossal £63bn. The bid came after news that Pfizer was making public its intentions to acquire AstraZeneca. The deal would be the largest foreign takeover of a British firm in history, but was quickly rejected.
AstraZeneca’s stance echoes the one it made in January after Pfizer sounded out the board over an acquisition. Pfizer returned with a public declaration of interest in late April after AstraZeneca’s leadership had recently discussed plans to spin off a number of its operations.
Despite the large amount Pfizer is offering there has been a considerable amount of concern over what the deal would mean for AstraZeneca’s 6,700 UK-based employees and the country’s science community in general. Many in the industry think that Pfizer would look to relocate much of the business to the US, but the company has attempted to address these concerns in a letter to Prime Minister David Cameron.
Pfizer claim they will maintain AstraZeneca’s science campus in Cambridge, as well as relocating much of its business to the UK
Pfizer claim they will maintain AstraZeneca’s science campus in Cambridge, as well as relocating much of its business to the UK. CEO Ian Reed said, “We recognize that our approach may create uncertainty for the UK Government and scientific community given the strategic importance of life sciences to the Government’s Industrial Strategy and the significance of the transaction. We would therefore like to assure the Government of our long term commitment to the UK where Pfizer already employs a significant number of colleagues across Research, Commercial, and Administrative roles.”
Despite these assurances, many still believe that Pfizer’s track record hints at a series of job cuts after it makes a strategic acquisition, pointing to its takeovers of Warner-Lambert in 2000, Pharmacia in 2003, and Wyeth in 2009. For example, after the Wyeth deal the company had an additional 47,000 jobs, taking it to 129,226 employees.
However, this would be steadily reduced over the next few years, with it hitting 116,500 in 2009 and now sitting at 77,700. While not all linked to job cuts, the firm does have a history of axing jobs after takeovers, as the Wall Street Journal points out.
Lord Heseltine, former government minister and an economic advisor to David Cameron, told the BBC that the government should have more say in what happens when a foreign firm is looking to takeover UK businesses. “Foreign takeovers can often be hugely helpful and I have no doctrinal preoccupations – I’ve done enough takeovers of small businesses myself to know how valuable they can be.
“But the important point is that every other advanced economy has mechanisms of some sort on a failsafe basis to scrutinise foreign takeovers and we’re the only country that doesn’t.”
Heseltine added that the UK’s science community is envied around the world, and should be at the centre of the country’s future economic ambitions. This, he believes, should mean even more scrutiny over any potential foreign takeovers. “There are so many issues about the science base, about the supply chains, about employment prospects that ought to be explored and I don’t see any way in which this can be adequately done unless the government has reserve powers.
“It’s a question of where their headquarters are, where the decisions are taken, who determines what research is done and where, how much government money goes into supporting the science base within a co-operative arrangement, where the supply chains are going to be and what the motive is.”