6 May 2014

Cable ‘keeping options open’ on Pfizer

Some in government paint the Treasury and No.10 as having gone all of a flutter when Pfizer kicked off their pursuit of AstraZeneca with warm words about the UK’s enticing tax policy – one Whitehall source even mimicked them fanning themselves, flushed with flattery.

Cool-headed Vince Cable and the Department for Business, Innovation and Skills, some sources claim, saw through that straight away and are now making it clear that Pfizer’s offers will not be taken at face value. Dr Cable told MPs that there exist powers to subject a takeover to a public interest test (under the 2002 act), albeit that the existing law would have to be hastily changed to get a new test appropriate to this case written into statute.

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The business secretary, with others in government, is trying to extract stronger commitments to jobs and investment in the UK than Pfizer has already given. But just as one parliament cannot bind another, so one board cannot bind future financial decisions in a massive pharmaceutical firm. You will never get a 100 per cent binding commitment, but you might hope to get a better one than the first one offered.

Just how much the UK government can really deploy “hard power” as well as “soft power” is a moot point. You might think, listening to Dr Cable, that he’s seen Pfizer has broken the window above the back door, its hand’s already reached in for the door handle, and the business secretary is standing pointing at an empty gun cupboard, saying: “I might work out a way to re-stock this.”

Not true, his aides say. There are unspoken levers and influences that might yet get better guarantees for British science investment and jobs.

We may not have long to see who’s right. Unless AstraZeneca changes its tune and engages, Pfizer has until the end of May to come up with something or UK law requires it to walk away.

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