AstraZeneca Takeover: MPs Question Bosses
The Government has looked at taking steps to intervene in the Pfizer-AstraZeneca takeover, the Business Secretary has told MPs.
Vince Cable said the Government could step in to try to block the deal between the two drugs giants if the law was changed, which was something being considered.
At present the Government can intervene on mergers only if it is in the public interest to do so, specifically matters of national security or financial stability - neither of which is the case with the Pfizer proposals.
However, Mr Cable told MPs on the Business, Innovation and Skills Committee that the law could be changed to include research and development allowing it to step in.
But, he cautioned, ultimately it would have to go to the European Commission, which considers mergers on the basis of competition and not jobs.
Mr Cable's comments came after the chief executive of Pfizer admitted that if the US drugs firm took over British-based AstraZeneca then there would be job cuts and the research and development budget would be slashed.
Ian Read told MPs there "would be some job cuts somewhere - that's part of being more efficient" and that he could not maintain the companies' joint research and development budget of $12bn (£7.1bn).
There are significant concerns that Pfizer plans to asset strip AstraZeneca, bringing about job losses among the firm's 6,700 British workforce and causing huge damage to British scientific research capabilities.
Pfizer claims a takeover would mean the new firm would be able to bring better products to patients with improved treatments for conditions such as cancer, heart disease and diabetes.
The boss of AstraZeneca, Pascal Soriot, warned that a merger would cause such huge disruption it would put patients' lives at risk because it would affect drug production.
He told MPs: "What would we tell the person whose father died of lung cancer because on of our medicines was delayed because the companies were too busy saving taxes, saving costs?"
Mr Soriot said Pfizer's £63bn takeover proposal did not reflect the value of AstraZeneca but that an offer at the right level would have to be considered. He said in the event of a hostile offer it would be for shareholders to decide.
Pfizer has offered a guarantee to base 20% of its total research and development workforce in Britain but Mr Read was unable to put a specific number of jobs on this.
He gave assurances that Pfizer would continue with the development of AstraZeneca's new research facilities in Cambridge, and that the newly-created £150bn†firm would be domiciled in the UK, paying tax to the UK Government.
Under the Takeover Panel rules, Mr Read said these assurances would be legally binding for five years.†
The rules were toughened up after the 2010 takeover of Cadbury by Kraft where the American food giant abandoned jobs pledges after the deal was struck.
Pfizer faced criticism from MPs that the move to take over AstraZeneca was motivated by its tax advantages - by basing themselves in the UK they will pay just 20% in corporate tax rather than the 38% they currently pay in the US.
Unions warned MPs that the move, which would be the largest ever takeover of a British firm by a foreign company, would be deeply damaging and urged caution.
They said Pfizer had cut 65,000 jobs at its sites across the world since 2005.
After the hearing Labour leader Ed Miliband†called for the public interest test to be broadened to include science.
He said: "There are too many unanswered questions about British science and British industry and this will affect our country for decades to come and that is why David Cameron should act now and have a proper test on whether this is in the nation's interests and if it isn't then he should block the deal."
Under takeover rules, having indicated its interest to shareholders, Pfizer now has until May 26 to make a formal offer, although one is widely expected later this week.