This week, AstraZeneca attempted to garner its shareholders' support for remaining independent rather than succumbing to a Pfizer bid by pointing to its promising drug pipeline and future revenues.
The British company has rejected an improved £63bn, £50 a share bid from the US pharmaceuticals giant, saying the valuation was still too low. Concern also grew over the future of scientific research in Britain amid fears of cost-saving closures of Astra facilities by a victorious Pfizer.
Business Secretary Vince Cable said he was worried about the bid on "public interest grounds". Labour leader Ed Miliband accused Prime Minister David Cameron of acting as a "cheerleader" for Pfizer.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
What the commentators said
To stop a deal, the government would have to argue that an independent Astra is crucial to the future of Britain plc, as Dominic O'Connell pointed out in The Sunday Times.That's "a tricky argument when Astra itself has been the biggest culler of pharma scientists' jobs in recent years".
Shareholders are the other key constituency. Many will have been impressed by Astra's presentation this week, said Nils Pratley in The Guardian. CEO Pascal Soriot "has succeeded in creating a sense that things could go very well for Astra after 2017", given the improvement in the pipeline under his aegis in the past 18 months. The upshot is that the price Astra can demand from Pfizer has probably risen to £60 a share.
Should the government interfere in future takeovers if the scientific research base appears at risk? No, said Allister Heath in The Daily Telegraph. The key to encouraging firms to grow their scientific base in the UK is to get the framework right: put tax incentives in place, maintain high levels of science teaching in schools and universities, and have plenty of venture capital available for entrepreneurial scientists.
That will work much better than trying to pick winners or seek guarantees from companies that they will stay for a few years.
The hands-off formula "has worked well in other areas", said Heath. Foreign ownership revived the car industry after "years of home-grown idiocy". Had there been a "public interest" test on foreign ownership of cars, we would probably "have given up on that key sector altogether".
The bottom line is that shareholders are "less likely to take bad decisions" than politicians and countries open to market forces are more likely to flourish than those that politicise business.
