If Pfizer's bid for AstraZeneca goes ahead, it will be the biggest takeover in British history.
But the consequences for jobs in the UK, as well as research and development, were on the minds of MPs on the Commons Business Committee yesterday. The MPs put questions to Ian Read, the Scottish boss of Pfizer, and they gave him a tough time. Was Pfizer a preying mantis? Or a shark perhaps? And, most importantly, would it keep its promises?
There is cause for concern. Not only has Pfizer cut jobs in recent years in the UK, its record abroad is troubling, with the Swedish finance minister warning the UK to be wary of Pfizer after it reneged on promises regarding its takeover of Pharmacia. To top it all, Mr Read said its proposed £63 billion takeover would lead to job cuts.
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Pfizer has made one promise - that it will base 20% of global research and development staff in the UK for five years - but without a guarantee on the number of R&D jobs the company will maintain, the value of the promise is questionable.
And the most important question remains unanswered: could Pfizer be forced to keep its promises? Not only does there appear to be no reliable mechanism for doing so, the record of previous takeovers is not encouraging. When Cadbury was circling Kraft in 2010, it promised a UK factory would be kept open but the promise was not kept. There was nothing to stop Cadbury, so what could stop Pfizer?
There also appears to be a lack of will by UK governments to act. The willingness of France to expel advances for its firms is well known, but the UK has appeared too willing to be fair about takeovers even when there are vital economic issues at stake. And such issues are present in the case of AstraZeneca, which accounts for 2.3% of all UK exports.
Clearly, the UK Government needs to strike a balance between protecting British interests and attracting foreign firms to invest. Part of the reason Pfizer is interested in AstraZeneca is that the UK's 20% corporate tax rate compares favourably to America's 40%, but there is no guarantee that any of the millions saved will be invested back into R&D. In fact, Pfizer has already said overall R&D spending would decrease after the takeover.
The Government does have the power to veto such takeovers by applying the public interest test but there is no likelihood of that because the UK believes in an open-door policy.
The basis for this appears to be the fear that, if the UK were tough on takeovers, British firms would face similar obstacles abroad but it is more likely foreign governments would continue to act as they always have.
Admittedly, the rules were tightened after Cadbury and that led to Pfizer having to provide much more information ahead of its bid. But the question is: were the rules tightened enough? We may not know until after a Pfizer takeover of AstraZeneca, by which time it could be too late for the company's staff and the UK economy.