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UK finance minister ready for "hard negotiation" with Pfizer

Source: Reuters - Sat, 10 May 2014 10:03 GMT
Author: Reuters
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* Says would be "extraordinary" not to engage with Pfizer

* UK's open economy has benefited from foreign investment

* But science, jobs and manufacturing of national interest

By Ben Hirschler

LONDON, May 10 (Reuters) - Britain is ready for "hard negotiation" to ensure Pfizer sticks to specific promises on jobs and science under the U.S. drugmaker's proposed takeover of AstraZeneca, its finance minister said.

"I think it would be extraordinary not to engage with AstraZeneca or Pfizer," George Osborne told BBC radio on Saturday.

He stressed Britain was an open economy that had benefited "enormously" from past investment by foreign companies, such as Tata Motors and Nissan in the car industry, and AstraZeneca itself had grown by taking over foreign firms.

Although the country's second-biggest drugmaker AstraZeneca has rejected a $106 billion approach from Pfizer in what would be the largest foreign takeover of a British company, the U.S. group is expected to continue its pursuit.

Osborne said there was there was "a lot of speculation about another bid coming".

Pfizer is currently weighing its next move, which could be a higher offer next week.

"We are an open economy, we benefit from that. But our national economic interest when it comes to a very big takeover like this is who's going to be providing the science and the jobs and the manufacturing," Osborne said.

Pfizer's past record of cutting jobs after swallowing smaller rivals such as Wyeth, Warner-Lambert and Pharmacia has stirred up a political storm and fuelled concerns among scientists about the impact of any deal on British science.

Pfizer has already given a five-year commitment to complete AstraZeneca's new research centre in Cambridge, retain a factory in the northwestern English town of Macclesfield and put a fifth of its research staff in Britain if the deal goes ahead.

But the U.S. firm has also said it could adjust its promises if circumstances change "significantly", prompting demands for more water-tight pledges.

Osborne's comments follow a call by Deputy Minister Nick Clegg on Friday for binding commitments from Pfizer.

"Pfizer have given assurances about the jobs they'd create in Britain and the science they'd do in Britain. We have to make sure those are real promises that we can hold them to," Osborne said.

"That's precisely what I'm doing and the Cabinet Secretary (Jeremy Heywood) is doing in engaging with both these companies ... I'm prepared, on the specifics, to get in the room and have a hard negotiation."

RETALIATION FEARS

While most scientists, trade unions and the opposition Labour Party have lined up against the Pfizer bid, business leaders are worried that any political moves to stop it going ahead could damage British interests.

"If the British government intervenes, it will send the worst possible signal to global business and repudiate a three-decade commitment to a free and open economy," Simon Walker, director general of the Institute of Directors, wrote in an opinion piece in the Times newspaper on Saturday.

"It would invite retaliation from other countries where British businesses have taken over major companies."

The British government has not ruled out the idea of subjecting the Pfizer takeover plan to a formal "public interest test", although competition lawyers believe the European Commission would probably block any such attempted intervention.

(Editing by Tom Heneghan)

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