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Pfizer to mount UK charm offensive

Friday, May 09, 2014 - 02:25

May 9 - Pfizer CEO Ian Read is heading for the UK to try to persuade politicians that his proposed merger with AstraZeneca is good for everyone. David Pollard looks at some of the obstacles potentially blocking what would be the UK's biggest corporate takeover.

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The man in the eye of the storm ... Pfizer chief Ian Read heads to the UK on a charm offensive next week. His target: politicians objecting to the U.S. company's proposed mega takeover of pharma firm AstraZeneca. This week, even pro-business prime minister David Cameron said he needs more assurances. (SOUNDBITE) (English) BRITISH PRIME MINISTER DAVID CAMERON, SAYING: ''Let me be absolutely clear - I'm not satisfied. I want more. But the way to get more is to engage, not just stand up and play party politics." His deputy, Nick Clegg, spoke to Reuters. (SOUNDBITE) (English) BRITISH DEPUTY PRIME MINISTER NICK CLEGG, SAYING: ''This government quite rightly is neutral about the decisions taken by individual companies. That is for their board, for their shareholders. But we are not neutral and we are not indifferent, nor should we be, about the effect that these decisions may have on issues of legitimate public interest.'' AstraZeneca has said 'no' to Pfizer's 53 pounds a share bid to form the world's biggest pharma business. Critics talk of potential job losses - a touchy issue ahead of British elections next year. Some in the scientific community worry it may injure research and development. But some in the investment community say Astra shareholders could be tempted by a higher offer - with provisos. James Bevan is the chief investment officer of CCLA. (SOUNDBITE) (English) JAMES BEVAN, CIO, CCLA, SAYING: ''Now, we all know from circumstances like Kraft and Cadbury's Schweppes that some of these deals fall apart, when companies come to the table and say 'well, actually, now we've opened the books it's much less attractive than we had thought'. I don't think the British government will stand for that in a Pfizer/Astra case and will want something that is really very watertight.'' One possible avenue for the government: to subject the deal to a ''public interest test''. Though it's thought the European Commission could block that. The merger would also face tough scrutiny elsewhere - especially China, where Pfizer and Astra are the No. 1 and No. 2 multinationals in the drug market. If it does fall apart, there's still plenty of appetite for deals. (SOUNDBITE) (English) JAMES BEVAN, CIO, CCLA, SAYING: ''I still think that pharmaceuticals are the area where people are most likely to see significant M&A activity, because every company can see industrial logic by having a single headquarters, by streamlining R&D, and by attempting to diminish the risk of reliance on just a few blockbusters.'' As for Ian Read: he's due for his first session before UK members of parliament next Tuesday.