Pfizer CEO flies in to pitch Astra deal to UK government

LONDON, April 29 Tue Apr 29, 2014 3:52pm EDT

LONDON, April 29 (Reuters) - Pfizer Chief Executive Ian Read flew into London on Tuesday to pitch his planned $100 billion takeover of rival British drugmaker AstraZeneca to government ministers and urge them not to obstruct the deal.

The British government has so far adopted a neutral stance on the matter - in part because Pfizer has yet to make a firm bid - but behind the scenes officials are warning Pfizer against making draconian research job cuts, industry sources said.

A spokesman for the U.S. company said Read was meeting a number of key "stakeholders" in Britain, but declined to give further details.

One person familiar with the situation said Read's agenda on Tuesday had included a visit to the Treasury, or finance ministry.

Finance Minister George Osborne has said any deal between Pfizer and AstraZeneca would be a "commercial matter between the companies", but he stressed the importance of science to Britain during a television interview on Tuesday.

"I want to see more British science," Osborne said.

Read, who studied chemical engineering in London in the early 1970s, knows he is stepping into politically dangerous territory with a deal that is designed to generate both big cost savings and lower tax bills.

Unions, the opposition Labour party and some scientists have already raised the alarm about a potential Pfizer takeover of Britain's second-biggest drugmaker, which employs nearly 7,000 people in Britain.

Read, however, said it would be a mistake for Britain to go down an interventionist path by trying to block the deal.

"The UK faces a choice," he told the Financial Times in an interview. "Do they focus on ensuring there is an educated workforce with the right incentives in place to attract investment or do they pick winners and losers."

Buying AstraZeneca would be the biggest ever foreign acquisition of a British company.

Pfizer insists it views Britain as an attractive location for both pharmaceutical research and manufacturing - helped by recent government tax incentives - but that it cannot make any firm commitments on future investment or jobs.

Pfizer already has a tarnished reputation in the eyes of some scientists after shuttering a large drug research site in Sandwich, southern England, where Viagra was invented with the loss of nearly 2,000 jobs three years ago.

The U.S. drugs giant also faces political headwinds on the other side of the Atlantic, where U.S. politicians are unhappy about its plans to move its tax base to Britain.

Pfizer's plan to merge the two companies into a UK holding company, while maintaining its operational headquarters in New York, would likely be the largest deal ever done that included such a so-called tax "inversion."

On the financial front, meanwhile, investors believe Pfizer will need to raise its suggested bid for AstraZeneca to more than $105 billion and increase the proportion of cash in the offer to win its prize. (Editing by Erica Billingham)