Pfizer faces grilling over AstraZeneca takeover bid

13th May 2014, Comments 0 comments

US drugs giant Pfizer will be grilled by British lawmakers on Tuesday over its £63-billion ($106-billion, 77-billion-euro) takeover bid for British rival AstraZeneca, amid mounting concerns over research and jobs.

Pfizer chief executive Ian Read will appear before the Business, Innovation and Skills Committee of the House of Commons to face questions over his company's five-year pledge to safeguard research facilities and jobs in Britain, should the bid succeed.

Members of parliament are likely to question Scotland-born Read on whether a takeover, which would see the merged company registered in Britain, would allow Pfizer to also avoid paying billions of dollars in tax to the US government.

In addition, the cross-party committee will question Pfizer's chief financial officer Frank D'Amelio and UK managing director Jonathan Emms, as well as AstraZeneca chief executive Pascal Soriot.

So far, AstraZeneca has rejected Pfizer's blockbuster takeover, arguing the terms of the offer -- increased from a previous informal bid of $99 billion -- has "substantially" undervalued the company.

On the eve of the hearing, Pfizer appealed directly to AstraZeneca shareholders on Monday, setting out the "strong strategic rationale" for the takeover.

Turning up the heat, Pfizer said on Tuesday that it was willing to alter the terms and structure of its cash-and-shares takeover bid, pitched at £50 per AstraZeneca share, in order to win approval from management.

- 'Best interests of all' -

"Pfizer believes there is compelling rationale for a combination and if AstraZeneca engages in conversations to provide Pfizer with a better understanding of its business and its prospects it may lead to a transaction that AstraZeneca can recommend," it said.

"Pfizer continues to believe that engagement by the AstraZeneca board is in the best interest of all stakeholders of both companies."

The US firm undertook earlier this month to complete AstraZeneca's proposed research and development (R&D) facility in Cambridge, eastern England, should the deal go ahead.

The company has also promised that one fifth of the new group's research and development staff would be based in Britain.

"Pfizer is reiterating its commitment to having at least 20 percent of the combined company's total R&D workforce in the United Kingdom going forward and creating a substantial innovation hub in Cambridge and the wider scientific community," it added on Tuesday.

AstraZeneca has previously attacked the bid for offering a "large proportion" payable in Pfizer shares, noting also that the combined firm would still seek to establish its corporate and tax residency in England.

The US-based maker of Viagra has already highlighted the considerable tax advantages from the transaction, which would create a new UK-incorporated holding company.

Late last week, Pfizer faced political pressure in the United States over the potential impact of the takeover.

The governors of Maryland and Delaware pressed Pfizer on Friday about the impact on jobs in their states, citing the lack of assurances.

And US senator Ron Wyden called for an overhaul of the tax code to discourage deals like Pfizer is pursuing, which would allow the new company to avoid paying billions of dollars in US taxes.

© 2014 AFP

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