Pfizer urges AstraZeneca to talk as British MPs slam offer

US drugmaker Pfizer suggested it could raise its proposed $106 billion offer if AstraZeneca engaged in talks, as its boss was grilled by UK politicians on his commitment to British research spending and jobs.

The New York-based group said it was disappointed by AstraZeneca's refusal to discuss its proposed merger. Chief Executive Ian Read did not rule out a hostile bid, telling a parliamentary committee he had various "options" for his next move.

Having pledged to keep a fifth of research jobs in Britain, Scottish-born Mr Read said he could not commit to maintaining a specific R&D budget there. “We’ll be efficient by some reduction in jobs. What I cannot tell you is how much or how many or where. We’ll look at this as our global combined footprint and then we’ll make decisions,” Mr Read said.

He told the panel he expected the combined research expenditure of the merged drugmaker would be lower than that of the two separate companies, noting one of the drivers of his proposed deal was to increase efficiency to keep both firms competitive in an increasingly tough marketplace.

Pfizer warned that Britain’s second-biggest drugmaker could wither without its financial muscle, after AstraZeneca rejected its May 2nd cash-and-stock offer worth £50 a share and said it had a bright future as an independent business. In a statement earlier today, Pfizer expressed again its frustration at the rebuff and said working with the UK company’s board could help deliver “optimal deal terms” which AstraZeneca could recommend to its shareholders.

“Engagement would provide AstraZeneca management with the opportunity to provide Pfizer a better understanding of the business and its prospects, and the credible basis for their new long-range targets,” it said.

“Pfizer will continue to be disciplined on price.”

Pfizer is widely expected to come back with a sweetened offer for AstraZeneca this week, although people with knowledge of the matter said it was likely to wait until after the parliamentary hearings to make any new move.

Pfizer’s bid would be the largest foreign takeover of a British firm and is opposed by many scientists and politicians, as well as AstraZeneca itself.

Parliamentary select committees cannot block corporate transactions but they can question executives ferociously, as banks, energy companies and Rupert Murdoch’s News Corp have all found out to their cost: The media coverage resulting from these firms’ sessions with lawmakers confirmed them as corporate bad guys for many members of the public and placed their future dealings under even closer scrutiny.

Reuters