Reject a deal that’s based on financial manipulation
Sir, In 59 years of my letters being published by you, I have regularly and repeatedly railed against the loss of ownership of British industry and commerce through the shortsightedness and sharp practices in the business world. The risk today is posed by the Pfizer bid for one of Great Britain’s and Sweden’s iconic companies.
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IN LETTERS
Bigotry curbed by a lack of language
Promises, promises – we’ve seen how they get broken
Tax breaks distract attention from the fundamentals
One more scare story for Yes camp
In the 1960s and 1970s, pharmaceuticals was a lossmaking department of ICI’s dyestuffs business. Its management favoured closure. Sir Michael Clapham, a visionary patriotic British business grandee, deputy chairman of ICI and subsequently president of the CBI, was adamant this should not happen. I was his clerk at the time and he graciously allowed me to speak on the topic. Our counsel to continue the pharmaceuticals activities prevailed. The closure of the pharmaceutical department would have deprived the world of statins and many other life-saving medicines. Short-term profits on this occasion, fortunately, did not outweigh long-term financial and enormous healthcare gains. Centralisation is not conducive to successful research and development.
Pfizer’s 2013 sales were $52bn, of which 39 per cent was in the US, generating huge gross margins there, but the upfront current federal tax charge was a paltry $142m, 5 per cent of the group upfront tax charge. Pfizer’s manipulation of its huge overseas capital resources to minimise its tax charge and the relocation of its tax base to the UK to encourage the naive UK authorities to support the bid, would appear to be extraordinarily cynical, and for the Treasury to rely on the promise of future tax take would appear to be whimsical. The US-dominated board seems to have lacked basic ethical standards, depriving the US economy of desperately needed tax revenue while, at the same time, being succoured by US public spending. It appears to be a highly centralised company, failing good corporate practice of dividing the two functions of chairman and chief executive.
It beggars belief to observe the apparent acquiescence of the UK towards this bid while being force-fed the harassment of BP by the US authorities. What is the good of a five-year employment guarantee when it takes 10 years to develop a new drug? A successful bid will uproot AstraZeneca’s purposeful goal of enhanced R&D capabilities.
Pfizer encompasses a corporate culture that is totally inimical to AstraZeneca. The deal is based on financial manipulation and should be rejected at any price.