AstraZeneca, a New York based pharmaceutical company, is poised to take over British Pfizer in a bid that rattles political feathers on both sides of the Atlantic. Some are saying the takeover bid of $106 billion, which was unsolicited, may lead to tax evasion and other unhealthy practices such as job losses due to restructuring of the company in Britain. Merger activity in the pharmaceutical sector is reaching record highs as the industry readjusts itself to compete in the marketplace. Deals in that area of business have reached an astonishing $240 billion since the start of January of this year, making 2014 the busiest year ever in deal making ventures.
Politicians in the United Kingdom are reacting warily to the unprovoked bid on the large corporate company within their borders, their feathers at Pfizer’s takeover bid rattles at the prospect of another foreign company entering their borders. They state that they are fearful that if the United States corporate entity acquires their local brand, it may lead to a slashing of jobs in their country. However, job losses in the U.K. within Pfizer in the past show that employment in life sciences as a profession does not rely heavily on big corporations’ payrolls in order to be maintained.
Be that as it may, United Kingdom politicians are still planning on holding special hearings in parliament sometime this coming week. The focus is supposedly going to be about the commitments the government has to ensuring the continuation of the nation’s jobs. It has been over a week since the two companies have held talks, at which time AstraZeneca turned down the offer presented by Pfizer. Despite that, many shareholders of AstraZeneca have indicated that they would be delighted if Pfizer and their company would once again engage in talks.
AstraZeneca’s conditions, if they were to begin negations with Pfizer, would include such terms as keeping a fifth of the company’s research and development in the United Kingdom, and that they would continue on with the planned building of the research and development hub in Cambridge, a technology hotspot in the U.K. Yet many local scientist, union and political feathers have been rattled by such a takeover bid from Pfizer, arguing that these terms would be hard to enforce should a foreign company gain control of a local business.
The bid from Pfizer is the biggest foreign takeover bid to be given to a British business at $106 billion, which AstraZeneca, the second biggest drug making company in the United Kingdom, has rejected. It speculates that the offering company will not keep its promises to attend to the terms with which AstraZeneca wants then to agree to. And critics are saying that the loss of such a domestic company as AstraZeneca, which employs roughly 6,700 people in the life sciences sector, would result in Britain being unable to claim that it is a considerable contributor to the science and technology field in the world marketplace.
There is evidence that AstraZeneca may not even be interested in what Pfizer has to offer. Considering what AstraZeneca wants out of Pfizer, the fact that Pfizer does not have a very good track record of honoring past deals that they have promised to beget, is creating massive suspicion that the proposing company is only after a reduction in its tax bill. Back in 2002, Pfizer had taken over control of the drug maker Pharmacia in Sweden. It failed to keep its promises of keeping local jobs in the Swedish economy, as did another American company in 2010 in the United Kingdom.
Kraft foods had acquired the chocolate maker Cadbury in 2010 and led the countries politicians and local workers to believe that it was going to preserve local jobs and keep the staff that was currently employed at its businesses. However, as soon as the deal was finalized, Kraft began layoffs, and also closed a factory that was supposed to remain open as part of the deal that was made. Critics of the Pfizer takeover say the cause of the feathers being rattled in political arenas is due to the fact that foreign entities are being allowed to come onto British soil and are being given tax shelters in which they do not have to pay as much taxes as they would have to in their country of origin.
On the other side of the Atlantic, in the United States, Capitol Hill is also paying attention to what is going on across the pond. American politicians are hoping to soon close a loophole on their side of the ocean that currently allows corporations to re-organize overseas in countries with lower tax bases than their home lands. They say that the companies which exploit the loophole benefit from such government services and protections as research and development tax deductions, patent protection and national security, including others.
Pfizer has promised a five-year undertaking of completing AstraZeneca’s new research center building that is to be located in Cambridge. They have also pledged to keep a northwestern factory in the town of Macclesfield open and committed to keeping a fifth of the company’s research staff based in Britain. Critics want more than just Pfizer’s word on these terms as the company has let it be known that the promises they make could be subject to change if circumstances were to experience compelling fluctuations in the future.
Around the world, leaders are also watching to see what the British Government will do in regards to the goings-on between Pfizer and AstraZeneca. They are waiting to see what role the government will play, if any, in this unfolding drama between the two corporate giants. Some experts say that if the political intervention in Britain rattles too many feathers in the world business market, the Pfizer takeover could lead to the marketplace believing that the United Kingdom is no longer a free and open market in which to deal fairly. That would shatter Britain’s 30 year old claim as being such a market, and may deter nations who would otherwise see the United Kingdom as a place to invest in.
Opinion by Korrey Laderoute