Pfizer's bid for AstraZeneca: ministers seek help of Brussels

http://www.theguardian.com/business/2014/may/17/pfizer-astrazeneca-bid-ministers-brussels

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The saga of the £63bn takeover bid for AstraZeneca by Pfizer took a fresh twist on Saturday as it emerged that ministers have opened talks in Brussels about strengthening the UK's ability to force the American firm to honour its commitments on jobs and research.

The Observer has learned that exploratory talks have begun with EU officials over amending the terms of the British government's public interest test, which currently only allows ministers to block takeovers where there are concerns over national security, media plurality or competition.

It has been mooted by UK ministers that the public interest test could be revised to include continued investment in research and design as grounds on which the government could threaten to block the takeover or, at least, seek stronger commitments from Pfizer than have so far been given.

A source said: "The public interest test does not have to be about blocking: it can be about securing legally binding commitments on research. Early exploratory talks in Brussels have begun about whether it is possible to write a commitment on research and design into the approval process, into the public interest test."

Labour has been calling for business secretary Vince Cable to amend the criteria for a public interest test on sensitive takeovers, and will regard the development as a victory.

Pfizer has said it will employ at least 20% of the new combined company's R&D workforce in the UK but there are serious concerns within Whitehall that this promise is to apply for five years only. Ministers want to force Pfizer to commit to longer and to use a strengthened hand to secure such a guarantee.

Should the takeover be completed, it would then be fall to the competition and markets authority to judge whether the government's public interest test was being met in the assurances made to the government.

Pfizer made a £63bn approach to AstraZeneca two weeks ago which was rejected but the US firm is preparing to come back with a higher offer that could value the Anglo-Swedish firm at up to £67bn.

It is unlikely that the deal could be completed within a year, allowing ministers time to secure agreement in Brussels for their plan to pass legislation to amend the public interest test. Labour has said they would vote in favour of such legislation.

Last week Pfizer's chief executive, Ian Read, declared that the takeover deal would be a "win-win for society", despite concerns that the US firm's prime motivation is to reduce the company's tax liability by redomiciling in the UK.

In an interview with the Observer, Sir Paul Nurse, the Nobel prize-winning scientist and president of the Royal Society, warns Pfizer: "We don't trust you". He adds: "Read has been nothing but evasive. There's nothing that hasn't been conditional. I haven't heard anything to make me believe he is prepared to make long-term commitments, and without those there is a risk they might just strip it."