Ex-Trade Minister Queries Pfizer Bid Pledges
The trade minister in the last Labour government has questioned the integrity of a pledge by Pfizer to protect British jobs if it acquires AstraZeneca and suggested that a dedicated panel should be established to rule on takeovers of strategically important companies.
Speaking to Sky News, Lord Davies said Pfizer's commitment to locate at least 20% of its research and development workforce in the UK may be little more than a "chocolate promise".
The phrase was a reference to the takeover of Cadbury, the British confectionery group, by Kraft Foods of the US while Lord Davies was minister for trade and investment in 2010.
"Promises often not kept by chief executives are not enough," he said.
"The undertakings made by large corporations have to be legally watertight?One really has to question whether this type of bid should be allowed, when such critical UK research and scientific capability is at risk."
Lord Davies, a respected City figure who now holds seats on the boards of companies including Diageo and Chime Communications, also criticised the Coalition for negotiating directly with Pfizer executives about future jobs and tax commitments.
"My question would be: shouldn't their first port of call be to speak to AstraZeneca, not an international hostile bidder?"
Dozens of important UK-based companies were taken over by foreign rivals during the three Labour administrations which governed between 1997 and 2010.
They included BAA (now Heathrow Airport Holdings), P&O, Scottish Power and Thames Water.
But the former minister said that Pfizer's desire to reap tax benefits from an AstraZeneca takeover raised questions about whether the deal was "more about financial engineering rather than industrial logic".
"Is there a danger that Pfizer makes lots of chocolate promises? Kraft made promises which they did not fulfil, were rebuked, but (there were no consequences)."
Lord Davies said there was already too much "intrusion" into business by governments and that more would be damaging.
However, he added that the UK needed to "reflect on whether certain industries, certain research capability, certain companies, certain clusters are of such national importance that the country should have a view".
He said that one solution could be to establish a small board comprising politicians and business people, who in cases like AstraZeneca would provide their views about the merits of a foreign takeover.
"Either way we must protect ourselves and yet be open. That is the nature of the dilemma. Leaving it just to the shareholders and boards may not be enough."
On Friday, Sir Roger Carr, the former chairman of Cadbury, who oversaw the takeover by Kraft, told Sky News that management and shareholders should usually be left to decide the fate of takeover bids unless there was a clear national interest and basis for politicians to be involved.
Pfizer's latest offer for AstraZeneca, worth £63bn, was rejected by the British company, which said on Friday that the proposal had "substantially undervalued" it.
Major City shareholders appear to be broadly supportive of the AstraZeneca board's stance, leaving Pfizer with the prospect of raising its bid again or going hostile with its existing offer.