(Adds AstraZeneca statement, Pfizer statement, Bailey comment,
By Ben Hirschler and William James
LONDON May 13 The boss of U.S. drugmaker Pfizer
faces UK lawmakers on Tuesday with a promise and a
threat - to protect British jobs in his proposed joint creation
with AstraZeneca of a global powerhouse upon which he
says the latter's future depends.
Ian Read faces hostile questions in parliament over his
proposed $106 billion play for AstraZeneca. He goes into
committee hearings having pledged to keep a fifth of research
jobs in Britain, and warned the country's second biggest
drugmaker could wither without Pfizer's financial muscle.
Pfizer's bid would be the largest foreign takeover of a
British firm and is opposed by many scientists and politicians,
as well as AstraZeneca itself.
The British company rushed out further details on its new
drug pipeline early on Tuesday morning, highlighting positive
late-stage trial results with a diabetes drug combination called
saxagliptin/dapagliflozin. It also flagged good news on four
drugs for asthma, rheumatoid arthritis and lupus on Monday -
aiming to prove it can stand on its own.
In response Pfizer also issued an early morning statement
saying again that it believed AstraZeneca's standalone business
faced challenges, and added that it was "disappointed at the
lack of engagement by the AstraZeneca board."
Pfizer said its offer was based solely on public information
and that engagement with the AstraZeneca board could help
deliver "optimal deal terms" which the British firm could
recommend to its shareholders.
"Engagement would provide AstraZeneca management with
the opportunity to provide Pfizer a better understanding of the
business and its prospects, and the credible basis for their new
long-range targets," it said. "Pfizer will continue to be
disciplined on price."
AstraZeneca rejected Pfizer's May 2 cash-and-stock offer
worth 50 pounds a share, arguing that the approach undervalued
it "significantly" and it had a bright future as an independent
The U.S. group is widely expected to come back with a
sweetened offer for AstraZeneca this week, although people with
knowledge of the matter said it was likely to wait until after
the parliamentary hearings.
Parliamentary select committees cannot block corporate
transactions but they can question executives ferociously, as
banks, energy companies and Rupert Murdoch's New Corp
have all found out to their cost: The media coverage resulting
from these firms' sessions with lawmakers confirmed them as
corporate bad guys for many members of the public and placed
their future dealings under even closer scrutiny.
Adrian Bailey, chairman of the Business Innovation and
Skills Committee that will be questioning Read, suggested on
Tuesday morning that he and his colleagues would be looking to
pin Pfizer down further on its jobs promises.
"We want to try and extend those assurances to give
confidence both to the employees and to the scientific community
in this country," he said in a BBC radio interview.
Pfizer already has a tarnished reputation in Britain after
shutting down most of its research in southern England where
Viagra was invented, with the loss of some 1,700 jobs.
Now it faces scepticism about its long-term commitment to
AstraZeneca, particularly after it said it could adjust promises
if circumstances changed "significantly."
"What we've seen in previous Pfizer takeovers is a reduction
in investment, job cuts and, frankly, asset-stripping. That's
the big concern. There's nothing that we've seen that guarantees
the same wouldn't happen here," said Willie Bain, a Labour
member of the Business Innovation and Skills Committee.
Unite, Britain's biggest trade union, ran an advertisement
in the country's biggest free morning newspaper Metro on
Tuesday, saying Pfizer was "the wrong prescription for Britain."
Read is also likely to come under fire over the ethics of
re-domiciling in Britain, for tax purposes only, in order to cut
its tax bill - a move that has sparked anger as well in the
United States, where the taxman stands to lose out.
Pfizer admits the proposed deal will involve job losses and
result in it paying less tax but argues such things are
necessary to improve efficiency in an industry where governments
are pressuring drug companies to cut costs.
In Tuesday's sessions lawmakers will also interrogate
AstraZeneca's French CEO Pascal Soriot and business minister
Then a second parliamentary committee on May 14 will
question both CEOs again, along with British science minister
David Willetts, about the science aspects of the deal.
"They can make enough noise to cause embarrassment and bring
a real spotlight onto this whole deal, which could be pretty
uncomfortable for Pfizer," said Navid Malik, head of life
sciences research at Cenkos Securities.
(With additional reporting by Kate Holton; Editing by Sophie