Pfizer really wants to buy AstraZeneca. So much so that after having three offers for the Anglo-Swedish drug company rejected, the big bosses flew in from the US to submit themselves to the political bearpit of parliament’s Business Select Committee.
The prospect of Pfizer getting its paws on AstraZeneca has worried politicians and scientists alike, who are suspicious of the company’s ‘commitments’ to keeping jobs and R&D in the UK. However, chairman and chief exec Ian Read hasn’t really done much to allay MPs’ fears (despite his various promises to David Cameron), skating around the committee’s questions about future research spending and the probable reduction in its tax bill.
Pfizer has made a five-year ‘legally binding’ pledge (more on which later) to finish AstraZeneca’s new R&D centre in Cambridge, keep its factory in Macclesfield and have 20% of research staff in the UK (although that could still mean cuts if the Viagra-maker reduced headcount worldwide).
However, Read admitted to the committee there would be job cuts and a reduction in total R&D spending if the merger went through, while refusing to specify them and distracting listeners with talk of a coin he keeps in his pocket (that has ‘straight talk’ on one side and ‘own it’ on the other – MT isn’t sure Read did either).
Whether Pfizer’s promises are actually ‘legally binding’ was also questioned by the sceptical MPs. Currently, the Takeover Code isn’t statutory, although breaking it could mean being frozen out of the City (no overpriced cocktails in the shadow of the Cheese Grater? Disaster). Read, on the other hand, said the Takeover Panel could refer it to the High Court if it reneged on anything. Business secretary Vince Cable wouldn't be drawn into detail, but said the government had 'the option of an intervention, should we want it'.
MT has a measure of sympathy for Read and his band of merry pharma men: as he kept repeating, it’s pretty hard to put numbers on anything without access to AstraZeneca’s firmly shut books. However, this was his big chance to sway Britain’s sceptical politicians and he didn’t really say very much. As the FT’s Jonathan Guthrie put it:
Pfizer's Read resembles a cuddly toy that says "I love you" when you prod him. Only he says "I don't have the numbers to answer that".— Jonathan Guthrie (@glyptodon) May 13, 2014
Pfizer also announced this morning it was publishing a presentation for AstraZeneca’s shareholders, setting out the ‘compelling rationale’ for combining the two companies (including that ‘efficient tax structure’ the Americans are so keen on). Its target was initially unmoved, calling Pfizer’s advances ‘opportunistic’ and containing ‘no new proposal’.
However, AstraZeneca chief exec Pascal Soriot did tell the committee their duties to shareholders mean ‘it's impossible for us to say we wouldn't accept any offer.’
Unless AstraZeneca’s shareholders decide they’d quite like a merger or Pfizer come back with a bigger, better offer, it looks like the big pharma love-in is a long way off.