Pfizer under growing political pressure in US, Britain
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Pfizer under growing political pressure in US, Britain

Last Updated: Saturday, May 10, 2014, 10:48
 
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Pfizer under growing political pressure in US, Britain
New York: Pfizer faces growing political pressure at home and in Britain as speculation mounts on whether the US pharmaceutical giant will sweeten its buyout offer for British company AstraZeneca.

Late this week, two US governors pressed Pfizer about the impact on jobs in their states, while a US senator called for an overhaul of the tax code to discourage deals like Pfizer is pursuing, which would move the new company`s headquarters to Britain, avoiding paying billion of dollars in US taxes.

Pfizer, the world`s largest pharmaceutical company, also faces tough questions in Britain, where officials fear the deal could erode the country`s research base.

Pfizer chief executive Ian Read next week will testify before a parliamentary panel in his second trip to London since launching the AstraZeneca campaign on April 28.

Analysts said the criticism from politicians, while unwelcome, is probably less important to the outcome than whether Pfizer increases its bid for a second time.

So far, AstraZeneca has said the proposals, the latest for USD 106 billion a week ago, "substantially" undervalues the company and do not merit entering merger talks. British regulators have set May 26 as the deadline for Pfizer to either raise its bid, launch a hostile takeover or abandon the effort.

"They clearly need to increase the bid to win over the shareholders," said Jeff Loo, an analyst at S&P Capital IQ, who thinks the chances of the deal are about 50-50.

In a joint letter to Read, the governors of Maryland and Delaware cited a pledge from Pfizer to British officials to keep 20 percent of the combined company`s research and development staff in Britain.

"We are concerned because, despite our requests, we have received no corresponding assurances about retaining jobs and research and development in our states," said Maryland Governor Martin O`Malley and Delaware Governor Jack Markell.

"Our concern is exacerbated by Pfizer`s history of closing US research facilities, including sites in Michigan and Illinois, after closing on previous corporate transactions."

Pfizer has about 3,100 employees in Maryland and 2,600 in Delaware.

"Pfizer has spoken with the governors and we understand and appreciate their concerns," a Pfizer spokesman told AFP, without providing further details.

Before Pfizer`s acquisition of Wyeth in 2009, the two companies employed a total of 129,226 people, but at the end of 2013, the combined company listed just 77,000 workers.

Some of the jobs eliminated went with divestitures. Since the Wyeth deal, Pfizer sold off major divisions on child nutrition (5,400 jobs) and pill casings (2,900 jobs), and spun off its animal-health unit Zoetis (9,800 jobs).

Senator Ron Wyden, in an op-ed in Friday`s Wall Street Journal, said the proposed deal underscores the need for the United States to revise its tax code to eliminate incentives for companies to relocate overseas to lower their tax bill.

"Legal or not, this loophole must be plugged," Wyden said in the article that did not take a direct position on the Pfizer-AstraZeneca deal.

The Pfizer spokesman said the company is "actively engaged" in the US tax debate and supports "comprehensive tax reform that enhances the global competitiveness of US-based companies operating internationally."

Regarding Read`s hearing next week in the British parliament, the Pfizer spokesman Read "will strive to be as open as possible."

This week British Prime Minister David Cameron called for more assurances from Pfizer that the deal is in Britain`s national interest.

"The most important intervention we can make is to back British jobs, British science, British R&D, British medicines and British technology," Cameron said on Wednesday.



AFP

First Published: Saturday, May 10, 2014, 10:45


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