The biggest business story this week has been the proposed takeover of pharmaceutical company AstraZeneca by US giant Pfizer. The buyer’s history stretches back to 1849, since when it has notched up a run of business successes such as: painkillers during the American Civil War, citric acid as the fizzy soft drink market took off, penicillin during World War II and then the launch of Viagra in 1998.
Pfizer’s growth in the past 15 years has also come from the acquisition of various other companies in their industry. The publicly listed business, with a market capitalisation of around £110 billion, has now set its sights on the UK with the AstraZeneca deal.
Pfizer’s proposed bid of £63 billion has been indicatively rejected by the UK firm, but its boss Pascal Soriot has implied he would have to consider any higher offers. However, as well as being a hot topic for discussion among the small army of staff and shareholders at the companies (AstraZeneca alone employs more than 6,000 UK citizens), politicians on both sides of the Atlantic have waded in to the debate.
Labour MP Adrian Bailey, who chaired a committee featuring Pfizer CEO Ian Read, asked for a response to claims that the US company was a “praying mantis” and a “shark that needs feeding”. Labour leader Ed Miliband, meanwhile, said: “There are serious concerns about this proposed takeover … David Cameron should act now and have a proper test about whether it is in our nation’s interests.”
From the government’s side, business secretary Vince Cable was more restrained, saying that he would “rather not expose” official thinking “in too much detail”. The politicians do have to tread a fine line between being anti-business and protecting national companies, not least in the wake of the inquiry triggered by Kraft’s disastrous takeover of Cadbury.
AstraZeneca has also been fighting a PR battle by announcing positive test results from one of its new drugs, making the business look more lucrative and thus more deserving of a higher valuation.
The huge takeover was bound to stir up interest on both sides, so far the weight of the argument seems to sit with AstraZeneca staying independent – but an increased bid from Pfizer may end up making this one offer that even the UK government can’t refuse.