Pfizer's proposed takeover of AstraZeneca: questions MPs should ask
|
Version 0 of 1. Questions for Ian Read, chief executive of Pfizer 1 How can you guarantee this takeover will not jeopardise Britain's position in scientific research and development? Pfizer has been attacked by scientists and MPs over its track record of closing down R&D facilities following previous takeovers. This month, John LaMattina, a former president of global R&D, said: "In major mergers today, not only are R&D cuts made, but entire research sites are eliminated. Nowhere is this more evident than with Pfizer." Pfizer said it has made legally binding commitments to investing in the UK. "With our commitment to foster research and development in the UK, we are matching words with deeds – and we will keep our word," it said in written evidence to the business committee. The Swedish finance minister has warned British MPs to take Pfizer's promises with a "sackful of salt" after the company reneged on jobs and R&D promises following its takeover of Sweden's Pharmacia. The number of employees there has dropped 90% since the takeover 12 years ago. 2 Are you doing this primarily to avoid a multimillion dollar tax bill in the US? Pfizer has declared that buying AstraZeneca comes with significant tax advantages. In a strategy known as "tax inversion", Pfizer could pay UK corporate tax rate of 20%, rather than 40% in the US. The UK also offers a special 10% "patent box" tax on products derived from research in the UK. The contentious tax plans have been attacked by prominent US senators Carl Levin and Roy Wyden, who are working to urgently close the loophole. Adrian Bailey MP, the chair of the business select committee, said Pfizer's tax plans will be a key focus of the session on Tuesday. 3 On what grounds would you go hostile? The proposed £63bn takeover is in the "friendly" stage. AstraZeneca has turned down three approaches and under British takeover rules Pfizer must put in a formal offer by 26 May. If AstraZeneca refused to engage, Pfizer could take its offer directly to shareholders, many of whom have indicated they would be interested if the price was right. Pfizer's boss, Ian Read, has already met with AstraZenca's biggest shareholders, and the finance director of the US firm, Frank D'Amelio, has said:"Any option you can think of would be an option." Questions for Pascal Soriot, chief executive of AstraZeneca 1 What reassurances can you give that British R&D will continue to prosper under a stand alone AstraZeneca? While the focus has fallen on Pfizer's R&D track record, AstraZeneca should be asked to make firm commitments on R&D spending in the UK, having closed its Alderley Park facility in George Osborne's Tatton constituency in Cheshire. However, at the same time AstraZeneca announced the creation of a new R&D centre in Cambridge. 2 If you survive this bid, what assurances can you give us that you won't fall prey to another takeover in the future? The pharmaceutical industry is undergoing a period of consolidation, including a multibillion pound asset swap between Britain's GlaxoSmithKline and Switzerland's Novartis this year. Experts argue that drugmakers need to club together to prosper, whether through takeovers, mergers or asset swaps. If Pfizer walks away, AstraZeneca could be the subject of takeover talk from elsewhere. 3 You have repeatedly rejected Pfizer's offers and said you want to remain an independent company, yet you have asked the government not to intervene to protect you. Why? AstraZeneca has rejected Pfizer's approaches and declared it is better off alone, both in terms of making returns for shareholders and developing new drugs. But it has asked the government to take a hands off approach to the deal, while Pfizer has openly wooed ministers and No 10. Questions for Vince Cable, business secretary 1 How are you going to ensure this does not become another Cadbury-Kraft fiasco? Kraft reneged on promises it made to MPs to secure British jobs and a west country factory in advance of its takeover of the chocolate maker. Can Cable be trusted to ensure that Pfizer keeps its promises on British jobs and R&D? 2 Is the coalition split on how to react to the deal? There appear to be ideological differences between the Treasury and the Business department over AstraZeneca. Osborne initially refused to debate any threat to the public interest and referred to the proposed deal as no more than a "commercial matter" between the companies. The chancellor has now vowed to take a "hard nosed" approach on Pfizer's commitments to British research and jobs. Cable, who has talked at great length about responsible capitalism, has not refused to rule out intervening to block the deal on the basis of a threat to the national interest. He said AstraZeneca and Pfizer were "motivated by hard-headed commercial considerations" while the government would be "motivated by hard-headed considerations of the national interest". 3 Does the government have the legal right to intervene? Lawyers have warned that the European commission would probably block any attempt by the UK government to intervene in a proposed takeover because a deal of that size would be referred to Brussels rather than national governments. Only in "exceptional" circumstances, such as defence, would that change. "I think it's going to be very hard for the government to intervene. The whole point about the European commission is that where you have big mergers they should be regulated centrally and individual member states should not be able to intervene except on exceptional grounds," said Anthony Woolich, a competition expect at the law firm Holman Fenwick Willan. |