U.K. Business Secretary Vince Cable said Pfizer Inc. (PFE)’s bid for AstraZeneca Plc (AZN) raised questions of “overriding national interest,” as the opposition Labour Party stepped up its rejection of the proposed takeover.
Labour leader Ed Miliband accused Prime Minister David Cameron yesterday of promoting Pfizer’s bid for London-based AstraZeneca. Cable later told reporters that reviewing rules on intervening in takeovers on public interest grounds was an option that the government was looking at.
Parliament’s Business, Innovation and Skills Committee will meet tomorrow to discuss whether to summon Pfizer executives. Chairman Adrian Bailey, a member of Miliband’s Labour Party, told reporters on April 29 that it was likely they would do so, as the bid needed to be “scrutinized very carefully.”
Political attitudes to the bid are hardening less than three weeks before local and European elections even after AstraZeneca’s board rejected Pfizer’s 63.1 billion-pound ($106.5 billion) sweetened offer on May 2.
“The British competition merger regime is non-political in the way it is applied, I think that’s valued in that Britain is open in that respect,” said Cable, a member of Cameron’s Liberal Democratic junior coalition partner. “But there is an important national interest here that we have got to safeguard the protection of jobs and investment and particularly high technology research in pharmaceuticals.”
Cable was speaking hours after Miliband told the BBC’s “Andrew Marr” program that Cameron was in “totally the wrong place” on the bid by New York-based Pfizer. “He has become a cheerleader for Pfizer’s takeover when instead he should be championing AstraZeneca’s long-term plan,” Miliband said.
By making the battle over the future of the U.K.’s second-biggest drugmaker a political issue, Miliband increases the pressure on Pfizer to offer stronger guarantees about its commitment to AstraZeneca’s British operations.
The prime minister’s office rejected the Labour leader’s comments, saying that it was neutral on the proposed bid and trying to ensure that jobs and investment in British science were protected.
After a series of meetings with British ministers and officials, Pfizer Chief Executive Officer Ian Read on May 2 wrote to Cameron pledging to keep at least 20 percent of the combined company’s research and development workforce in the U.K. for at least five years and to retain “substantial” manufacturing facilities at AstraZeneca’s site in Macclesfield.
The prime minister responded that day by describing these as “robust assurances,” and saying that “any merger is a decision for both companies.”
Miliband, in contrast, told the BBC that Pfizer’s promises were “pretty weak.” Cable said that “obviously there is a lot of small print to study the question about how these obligations are binding.”
Miliband wrote a letter to Cameron yesterday to set out his concerns, saying a more thorough review is needed to determine if the takeover is in Britain’s economic interest.
“We need a more substantive assessment of whether this takeover is in the national economic interest before the U.K. government allows itself to be seen to be supporting it,” Miliband said in the letter, released by his office. Future takeovers should face “a stronger public interest test,” he said.
“The government isn’t cheerleading for Pfizer,” Cameron’s office responded in a statement. “It is fighting for British jobs and British science. By suggesting otherwise, Ed Miliband is putting politics before the national interest and undermining that position. We engaged early with both companies precisely to avoid previous governments’ failures in these types of situation.”
The debate, a year before the general election, has echoes of a previous pre-poll takeover battle. In January 2010, the then-Conservative opposition used Kraft Foods Group Inc. (KRFT)’s takeover of candy maker Cadbury Plc to portray a Labour government that was out of touch with the British people.
An ICM Research poll commission by the Telegraph newspaper yesterday showed Labour’s lead over the Tories had narrowed to one percentage point, with Miliband gaining 32 percent of votes in a general election and Cameron 31 percent. ICM interviewed 2,001 people online between April 30 and May 1.
“We need to act swiftly in the case of this specific bid,” Miliband said in his letter. “I have seen the assurances you have received from Pfizer, but this merger would have an impact for decades to come, so it is not enough to have a few specific promises that only last for the next few years.”