UK finance minister ready for 'hard negotiation' with Pfizer

LONDON Sat May 10, 2014 11:07am EDT

The Pfizer logo is seen at their world headquarters in New York April 28, 2014. REUTERS/Andrew Kelly

The Pfizer logo is seen at their world headquarters in New York April 28, 2014.

Credit: Reuters/Andrew Kelly

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LONDON (Reuters) - Britain is ready for "hard negotiation" to ensure Pfizer sticks to specific promises on jobs and science under the U.S. drugmaker's proposed takeover of AstraZeneca, its finance minister said.

"I think it would be extraordinary not to engage with AstraZeneca or Pfizer," George Osborne told BBC radio on Saturday.

He stressed Britain was an open economy that had benefited "enormously" from past investment by foreign companies, such as Tata Motors and Nissan in the car industry, and AstraZeneca itself had grown by taking over foreign firms.

Although the country's second-biggest drugmaker AstraZeneca has rejected a $106 billion approach from Pfizer in what would be the largest foreign takeover of a British company, the U.S. group is expected to continue its pursuit.

Osborne said there was there was "a lot of speculation about another bid coming".

Pfizer is currently weighing its next move, which could be a higher offer next week.

"We are an open economy, we benefit from that. But our national economic interest when it comes to a very big takeover like this is who's going to be providing the science and the jobs and the manufacturing," Osborne said.

Pfizer's past record of cutting jobs after swallowing smaller rivals such as Wyeth, Warner-Lambert and Pharmacia has stirred up a political storm and fuelled concerns among scientists about the impact of any deal on British science.

Pfizer has already given a five-year commitment to complete AstraZeneca's new research center in Cambridge, retain a factory in the northwestern English town of Macclesfield and put a fifth of its research staff in Britain if the deal goes ahead.

But the U.S. firm has also said it could adjust its promises if circumstances change "significantly", prompting demands for more water-tight pledges.

Osborne's comments follow a call by Deputy Minister Nick Clegg on Friday for binding commitments from Pfizer.

"Pfizer have given assurances about the jobs they'd create in Britain and the science they'd do in Britain. We have to make sure those are real promises that we can hold them to," Osborne said.

"That's precisely what I'm doing and the Cabinet Secretary (Jeremy Heywood) is doing in engaging with both these companies ... I'm prepared, on the specifics, to get in the room and have a hard negotiation."

RETALIATION FEARS

While most scientists, trade unions and the opposition Labour Party have lined up against the Pfizer bid, business leaders are worried that any political moves to stop it going ahead could damage British interests.

"If the British government intervenes, it will send the worst possible signal to global business and repudiate a three-decade commitment to a free and open economy," Simon Walker, director general of the Institute of Directors, wrote in an opinion piece in the Times newspaper on Saturday.

"It would invite retaliation from other countries where British businesses have taken over major companies."

The British government has not ruled out the idea of subjecting the Pfizer takeover plan to a formal "public interest test", although competition lawyers believe the European Commission would probably block any such attempted intervention.

(Editing by Tom Heneghan)

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Comments (4)
umkomazi wrote:
NONONONONONONONONONONONNNONO!!!!

This is not wanted – the yanks are just using this as a tax scam from high US Corporate taxes!

They will COMPLETELY bleed AZ dry & leave a dry husk; they will ship all the patents etc away leave the UK with nothing!!!

Oborne couldn’t negotiate his way out of a wet paper back – he’s a wimp & will probably hand the yanks all sorts of tax bribes!!!

May 10, 2014 6:53am EDT  --  Report as abuse
rissey wrote:
Is the government party to any takeover deals?
How would such takeover deals be “public interest” regardless of size?
Ian Reed’s : “Win-Win” strategy – motherhood statement, not different with what Bernie Madoff have spewed when he was top dog.
Main strategic interest for UK – does it bring more for the HMRC in the form of tax revenue into the Treasury?
Is Astra desparate for sale? Valuation is at a premium, insitutional investors best sell Astra and Pfizer and buy GSK.

May 10, 2014 7:23am EDT  --  Report as abuse
MonitorLizard wrote:
I’m an American and I predict that Pfizer will put the screws to any company they absorb into their corporate protoplasm. The British have reason to be concerned and you can bet the US government has its tentacles in this.

May 10, 2014 8:32am EDT  --  Report as abuse
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