Astra bid causes political storm

Politicians have waded into the debate over Pfizer's takeover attempt of AstraZeneca.

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.

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.

Recommended

Andrew Hunt: why it's a great time to be a deep value investor
Value investing

Andrew Hunt: why it's a great time to be a deep value investor

Merryn talks to Andrew Hunt, author of Better Value Investing, about his adventures in the market's dark underbelly, looking for the hated and neglec…
22 Oct 2021
Why fed-up workers are quitting their jobs
Economy

Why fed-up workers are quitting their jobs

Workers are leaving their jobs at an astonishing rate, especially in the US, leading to a shortage of workers. What will that mean for our economies? …
22 Oct 2021
Back on track: why you should invest in railways
Share tips

Back on track: why you should invest in railways

Rail transport suffered a severe blow in the pandemic. But while post-Covid-19 working patterns may reduce revenue, trends in technology, long-distanc…
22 Oct 2021
Share tips of the week – 22 October
Share tips

Share tips of the week – 22 October

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
22 Oct 2021

Most Popular

How to invest as we move to a hydrogen economy
Energy

How to invest as we move to a hydrogen economy

The government has started to roll out its plans for switching us over from fossil fuels to hydrogen and renewable energy. Should investors buy in? St…
8 Oct 2021
How to invest in SMRs – the future of green energy
Energy

How to invest in SMRs – the future of green energy

The UK’s electricity supply needs to be more robust for days when the wind doesn’t blow. We need nuclear power, says Dominic Frisby. And the future of…
6 Oct 2021
Properties for sale for around £1m
Houses for sale

Properties for sale for around £1m

From a stone-built farmhouse in the Snowdonia National Park, to a Victorian terraced house close to London’s Regent’s Canal, eight of the best propert…
15 Oct 2021