Out-Law News 1 min. read
06 May 2014, 2:49 pm
Miliband made the recommendation in a letter to UK prime minister David Cameron in which he outlined his "concerns" with US life sciences business Pfizer's bid to acquire pharmaceuticals giant AstraZeneca, which is headquartered in London. AstraZeneca has so far rejected Pfizer's takeover bids.
Miliband criticised the UK government after claiming that it had given the perception it was "cheerleading" for the deal to go through despite receiving "inadequate assurances" from Pfizer about the long term impact of the proposed takeover on UK jobs and investment in research and development.
"I am strongly of the view that, when it comes to such a strategically important part of UK PLC, we need a more substantive assessment of whether this takeover is in the national economic interest before the UK government allows itself to be seen to be supporting it," Miliband said. "There are reasons to think that such an assessment would be of value."
"Firstly the company’s track record in the UK raises concerns, including their decision in 2012 to close down the world-renowned R&D facility in Sandwich, leading to the loss of 1,500 jobs. Secondly AstraZeneca currently spends a significantly higher proportion of its turnover on R&D than Pfizer – a crucial concern given the importance of pharmaceutical investment in R&D to the UK science base. Lastly there are concerns about Pfizer’s wider track record regarding the impact on research of previous takeovers," the Labour leader said.
"For the future this case strengthens the view I have expressed in the past that we need to look again at the UK’s takeover regime. In particular there should be a stronger public interest test which encompasses cases such as these where strategic elements of our science base, with impacts well beyond the firm concerned, are involved. Should you wish to make changes to that effect the Labour Party will support you to make them happen," Miliband said.
Miliband said there should be "an immediate independent assessment" conducted into Pfizer's prospective takeover of AstraZeneca to ensure the implications for the UK's "national economic interest" are analysed in this case.
Under the Enterprise Act, the UK government can refer certain proposed mergers and takeovers to the UK competition regulators to assess. Regulators generally have 24 weeks to decide whether to give their backing to the deal.
Currently, though, only proposed takeovers in the defence and media sectors can be called in by the UK government for assessment where there are either "interests of national security" engaged or where there is a threat to media plurality.