UK Wellcome Trust raises ‘concerns’ over Pfizer bid
Trust chairman raises doubts over Pfizer’s commitment to investment in Britain
A general view of the Macclesfield Campus of pharmaceutical company AstraZenica.
Britain’s biggest medical research foundation has told the government it has “major concerns” over Pfizer’s £63 billion offer for AstraZeneca, as the Wellcome Trust became the latest powerful voice to weigh in over the mooted deal.
Sir William Castell, the chair of the world’s third largest charitable foundation, and Jeremy Farrar, director of Wellcome Trust, outlined their concerns in a private letter to George Osborne last Friday as the US drugmaker made its opening offer for the UK firm.
Sir William told the UK chancellor that AstraZeneca was “critical” to the UK’s science base and raised doubts over Pfizer’s commitment to investment in Britain.
“Pfizer’s past acquisitions of major pharmaceutical companies have led to a substantial reduction in R&D activity, which we are concerned could be replicated in this instance,” said the letter.
Wellcome’s £16 billion charitable endowment is a bedrock of UK science, pouring more than £750 million a year into biomedical research. It works closely with industry, including a new genetic research partnership with GlaxoSmithKline, the UK’s biggest drug company.
Sir William’s intervention comes as Pfizer mulls whether to return with a higher offer after AstraZeneca last week refused to enter takeover talks. Ian Read, the US company’s chairman and chief executive, is due in London on Tuesday to face questions over the proposed deal from MPs.
The value of Pfizer’s latest cash and share offer has slipped since it reported disappointing first-quarter results on Monday – pushing down the value of its stock by as much as 6 per cent before it recovered slightly on Thursday.
Pfizer proposed that AstraZeneca shareholders would receive 1.845 shares in the combined company and 1,598p in cash, valuing the deal at £50 per share before the recent dip in Pfizer’s stock, making the total offer now worth £60bn.
Shares in AstraZeneca closed up 1.8 per cent at £46.80. In early afternoon trading, shares in Pfizer were slightly up at $29.13.
Some big shareholders in the UK company have said they would want a higher price and a larger proportion of cash before backing a deal.
Pfizer must ensure that at least 20 per cent of the shares of the combined group stay in UK hands if it is to redomicile itself in the country for tax purposes, meaning there is a limit to how much cash it can offer.
Political headwinds have added to the challenges for Pfizer after a hardening in the government’s attitude to the proposed deal.
The opposition Labour party is pressing prime minister David Cameron to extend the government’s takeover powers to intervene in what would be the biggest foreign takeover of a UK company.
The government insist it is to “keep all options open” while pressing Pfizer for stronger assurances over jobs and investment.
Copyright The Financial Times Limited 2014