Britain plans to remove "wiggle room" in foreign takeover rules -minister

LONDON, July 13 Sun Jul 13, 2014 6:13am EDT

LONDON, July 13 (Reuters) - Britain plans to force foreign buyers of major British companies to make binding commitments on issues that are in the national interest such as investment in research, Business Secretary Vince Cable said on Sunday.

This issue was raised earlier this year when U.S. drugmaker Pfizer tried to take over Britain's AstraZeneca, prompting fears it would lead to cuts in UK science jobs and research.

"What the government did then was to engage in negotiations to seek assurances. Where we now have to strengthen that is to make sure that where commitments are made, there is no wiggle room," Cable told the BBC's Andrew Marr show.

Pfizer gave a five-year commitment to complete AstraZeneca's new research centre in Cambridge, retain a factory in northern England and put a fifth of its research staff in Britain, but said these pledges could be adjusted if circumstances changed "significantly".

In 2010, U.S. foods group Kraft, which made a successful bid for British rival Cadbury, had promised to keep one of Cadbury's factories open, only to go back on the pledge soon after the deal was completed.

Cable said the government was discussing its options with the Takeover Panel, which oversees mergers and takeovers involving British companies.

"We may well get into the area of having financial penalties in order to make sure those commitments are binding ... There is wiggle room in the existing rules and we want to deal with it in such a way that there is no escape from it," he said.

Cable said it was likely the law would need to be changed to enforce such commitments, but new legislation could be introduced quickly as there was agreement across government about the need for such measures.

Cable said his Liberal Democrat party, the government's junior coalition partner, believed that a second measure also needed to be introduced to deal with cases where companies are not willing to make such assurances.

"You then need some fall back powers, you need a last resort where the government can intervene, can invoke the public interest," he said.

Currently, a formal public interest test which gives politicians the power to intervene in corporate deals only applies to areas such as media plurality and financial stability. (Reporting by Kylie MacLellan. Editing by Jane Merriman)