Wednesday, 7 May 2014

Pfizer/Asthma Zeneca - more splendid Indian Bicycle Marketing...

... with a bit of Pork Barrel for luck. From yesterday's Evening Standard:

Boris Johnson today said ministers should be certain that London's science industry would not suffer before backing Pfizer's £63 billion takeover bid for AstraZeneca.

The Mayor said politicians could not be "aloof" from the deal, which the British company has so far resisted.

In particular, he argued that the Government should ensure that UK research and development received funding to cement its world-class status.


From this morning's City AM:

CHANCELLOR George Osborne yesterday launched a scathing attack on Labour's track record, in an increasingly bitter political row over the proposed takeover of UK drugs giant Astrazeneca.

Using language that flirted closely with protectionism, which he has so far avoided, Osborne attacked Labour's free trade approach to foreign takeovers during its 13 years in office. When in power, Labour allowed Kraft's takeover of Cadbury.

"We'll take no lectures from the last government that virtually destroyed the British economy, and time after again, when there were takeovers, did nothing to protect Britain's national economic interest," he said.

It follows Labour's criticism that Prime Minister David Cameron was acting as a "cheerleader" for Pfizer's controversial takeover bid.

9 comments:

DBC Reed said...

The original City AM story has Vince Cable harrumphing that he is concerned that Pfizer is only trying to decrease its tax bill.

Why have UK Corporation Tax at a lower competitive level than the US then?

DBC Reed said...

The original City AM story has Vince Cable harrumphing that he is concerned that Pfizer is only trying to decrease its tax bill.

Why have UK Corporation Tax at a lower competitive level than the US then?

The Stigler said...

DBC,

"The original City AM story has Vince Cable harrumphing that he is concerned that Pfizer is only trying to decrease its tax bill."

Can you explain that?

Couldn't Pfizer just move some of the business here and achieve the same thing at a much lower cost?

paulc156 said...

Apparently if less than 80% of the company’s stock is owned by existing Pfizer shareholders after the deal then the new parent company gets the benefit of lower corp tax entailed in headquartering in the UK. Much of Pfizer's earnings attributed to subsidiaries in tax havens aren’t then taxed when they are brought home as would presently be the case. Currently Pfizer have something like $70 billion in offshore accounts.

The Stigler said...

paul,

So, why spend billions on AZ rather than just buying 75% of my little company for a million quid? Much cheaper.

paulc156 said...

TS. I guess Pfizer would still be over the 80% threshold. You'd need to up the ante.


The Stigler said...

paul,

I don't understand what the 80% is then.

I thought you meant that if Pfizer buy less than 80% of AZ that they get tax breaks?

paulc156 said...

It means that Pfizer shareholders would have to own less than 80% of the newly merged company ie; theirs and yours. Since they are currently 100% owned by existing shareholders the value of your company would have to be several orders of magnitude greater to achieve the desired effect!

Mark Wadsworth said...

DBC: "Why have UK Corporation Tax at a lower competitive level than the US then?"

Exactly. That;s the whole point of shifting to LVT and having low or no tax rates for everything 'mobile'. The world and his uncle will be re-routing profits through the UK, so that's win-win for us!