Pfizer’s bid for AstraZeneca scrutinised – should it be only the shareholders who decide?
AstraZeneca employs over six thousand people in the UK. Pfizer has made nine promises in a letter to David Cameron which are said to reflect Pfizer’s commitment to the UK. The UK would be the EU centre of the joint company. In addition 20% of the joint company research would be based in the UK. The letter was sent the same day that the AstraZeneca board rejected the Pfizer offer of £50 a share. But what is the ceiling for Pfizer? Will they let AstraZeneca have more than half their tax savings? Astra Zeneca is in a very strong position even without the Pfizer deal on the table and then informed their shareholders of the company’s excellent growth prospects at the same time Pfizer has announced a 9 per cent drop in first quarter revenue.
I am on the “Against” side of the fence and ultimately the joint company would be just too big and powerful and any economies of scale I fear would line shareholders pockets, increase the cost of medicines in the UK and also more than likely cause a streamlining of the workforce and loss of jobs in the UK. Yes the UK would gain some extra tax in their coffers, but for how long and what would the hidden costs be?
Although I understand that it is not really the government’s role to decide the fate of the merger and that ultimately the shareholders will choose, I fear it has far reaching consequences if not in the first 5 years most definitely in the next 10 years.
We should be bolstering our research and development in the UK, investing in education and on innovation, and ensuring that all our bright graduates are not lured away from the UK to the states and elsewhere.
I have also a concern that the solas agreements that Pfizer has in place if extended to more AstraZeneca products would bring many problems to the medicine wholesale worlds.
There is also the question of can the US government close the tax loop whole which allows Pfizer to reduce its tax liabilities by 7% by domiciling itself in the UK and if they did would the bid be happening? Would there be any American backlash as a result of such a merger?
Mergers of this size are incredibly difficult to deliver as the $35 ban failed “Merger of equals” between Omnicom and Publicis showed us also.