Pfizer Chases Merger Deal

Pfizer is still pushing to create a tax-advantaged U.K.-based drug giant even after AstraZeneca rejected its latest $106 billion takeover offer. To bolster Pfizer’s position, CEO Ian C. Read has promised British Prime Minister David Cameron that the company will keep significant operations in the U.K. The company also is highlighting the benefits of a merger in a new infographic on its merger-related website.

AstraZeneca is countering by making its case for independence. In a call with analysts last week, CEO Pascal Soriot emphasized that the firm “now has the right size, focus, and team to deliver on one of the most exciting pipelines in the pharmaceutical industry.” AstraZeneca, like Pfizer, has been struggling with declining sales.

Both Read and Soriot will have to provide even more answers. At meetings on May 13 and 14, the U.K. Parliament’s Business, Innovation & Skills and Science & Technology committees, respectively, will hear from the companies, trade unions, and government officials about the potential impact of what could be the largest foreign takeover of a U.K. firm.

The hearing will be “an opportunity to scrutinize the pledges on research and development being made” and “pose questions about how the government will ensure that these commitments are met,” according to Science Committee Chair Andrew Miller. Well-known for postacquisition job cutting, Pfizer eliminated 2,000 positions when it closed its Sandwich, England, site in 2011.

AstraZeneca accounts for about 2.5% of exports and employs 7,000 people in the U.K. “The life sciences industry is of paramount importance to the U.K. as part of the government’s industrial strategy,” Secretary of State for Business, Innovation & Skills Vince Cable told the House of Commons on May 6. “We are committed to ensuring that we are at the forefront of life sciences research and development, with high-quality jobs, manufacturing, and decision making in the U.K.”

Although a merger decision is “ultimately a matter for the shareholders of both companies,” Cable suggested that the government might be able to use its powers, if not blocked by the European Commission, to assess if the deal is in the public interest. Doing so would be “a serious step, and not one that should be taken lightly,” he added.