July 13 (Bloomberg) -- The U.K. will tighten rules governing foreign takeovers of British companies to ensure bidders are held to commitments such as maintaining jobs, Business Secretary Vince Cable said.
The government is consulting with the independent Takeover Panel, which supervises bids, on concrete measures that might include financial penalties, Cable said in an interview on BBC Television’s “Andrew Marr Show” today. He said ministers need a power of last resort they can invoke if a bid is against national interest.
New York-based Pfizer Inc.’s offer for AstraZeneca Plc earlier this year raised new demands for Britain to tighten rules on foreign takeovers, with lawmakers questioning Pfizer’s assurances on retaining jobs and drug research in the U.K. Four years ago, Kraft Foods Group Inc. went back on a pledge to keep open a plant in the west of England when it took over candy maker Cadbury Plc.
“There is wiggle room in the existing rules and we want to deal with it in such a way that there is no escape clause,” Cable said. “We may well get into the area of having financial penalties in order to make sure that those commitments are binding.”
There’s agreement between his Liberal Democrats and Prime Minister David Cameron’s Conservatives in the coalition government on the need to change the law quickly if required, the business secretary said.
Cable also urged a fallback power for the government to protect the national interest, if a bidder failed to provide satisfactory assurances.
“We are going to need a last-resort power, such that if there is something that is very clearly against the national interest, and the loss of our R&D in pharmaceuticals is a very good example, the government can in those circumstances intervene,” Cable said. He said the Tories hadn’t yet agreed to that proposal.
Pfizer abandoned its $117 billion bid for AstraZeneca in May after the two companies failed to agree on the price.
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