Pfizer presses AstraZeneca case as CEO faces UK grilling

Monday 12 May 2014 09.13
Pfizer continues to make the case for AstraZeneca takeover deal
Pfizer continues to make the case for AstraZeneca takeover deal

US drugmaker Pfizer pressed the scientific case for its controversial plan to acquire AstraZeneca today as its chief executive prepared for a grilling from British lawmakers.
              
This marks the latest phase of Pfizer's campaign to counter critics of its proposed $106 billion deal.

Pfizer's research head Mikael Dolsten said he had been through five different mergers and acquisitions and denied such big transactions disrupted drug research.
              
"If you keep your sense of curiosity and an open mind, you can learn tremendously," he said in a video posted on the company's website.
              
British lawmakers are due to quiz Dolsten's boss, Pfizer chief executive Ian Read, tomorrow about his plans to acquire Britain's second-biggest pharmaceuticals business - a deal driven in large part by Pfizer's wish to cut its tax bill.
              
They will also interrogate AstraZeneca CEO Pascal Soriot and UK business minister Vince Cable.

A second parliamentary committee on May 14 will question both CEOs again about the science aspects of the deal, along with Pfizer's Dolsten and UK science minister David Willetts.
              
Buying AstraZeneca would be the largest foreign takeover of a British firm. Pfizer's approach has been rejected by AstraZeneca and the idea of a merger is opposed by many scientists and some politicians who fear it would damage the UK's science base.
              
Dolsten said there was "a really great fit" with the products that AstraZeneca had in its portfolio, with potential for combining drugs in areas such as lung cancer to offer much more effective treatments.
              
Pfizer has 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 US firm has also said it could adjust those promises if circumstances change "significantly", prompting demands for more watertight pledges.
              
British Prime Minister David Cameron said on Sunday he had made"very good progress" in securing guarantees from Pfizer. 

Pfizer is widely expected to come back with a sweetened offer for AstraZeneca this week, though people familiar with the matter said it was likely to wait until after the parliamentary select committee hearings.
              
The British group rejected a May 2 cash-and-stock offer worth £50 a share from its larger American rival, and CEO Soriot has been on a roadshow to meet leading investors and layout his strategy for a prosperous independent future.
              
Soriot has secured the backing of several high-profile shareholders, but others have told Reuters they would like him to engage with Pfizer if the US group makes an improved offer. 

In addition to wanting a higher price - many analysts think Pfizer will have to offer around £55 a share - investors are also keen to increase the proportion of cash in any deal from 32% at present.
              
Pfizer is limited in the amount of cash it can offer since in order to keep the tax advantages of re-domiciling to Britain it must ensure at least 20% of the enlarged group is British-owned.
              
Under British takeover rules, Pfizer has until May 26 to make a firm bid for AstraZeneca or walk away.

Political concerns about the proposed takeover have been fuelled by Pfizer's record of making big job cuts after past acquisitions. It also has a tarnished reputation in Britain after shutting down most of its drug research in Sandwich, where Viagra was invented, with the loss of some 1,700 jobs.