Should government “allow” the pharmaceutical take-over?


There is one good reason why government should not decide who should in the future owns the assets of Astra Zeneca. That is the government does not  own them, someone else does. If you want to live in a free society you need to permit private property, and allow people to sell and buy property as they see fit.

There has been a bipartisan agreement for many years that the government should only intervene to stop a takeover of a company if the takeover damages competition too much in the marketplace. Then government does intervene to prevent the accumulation of monopoly power by private interests. This settlement has also been reinforced by EU Competition Law. The last Labour government decided to make our competition law comply fully with emerging EU rules and requirements, which too are based on the prime aim of preventing damage to c0mpetition in the market. Monopolies are bad things, allowing companies to overcharge, provide a bad service, and fail to invest and innovate. That’s something the public sector knows all about from some of its own activities.

There have been few exemptions to the primacy of competition as the sole criterion to intervene. Media plurality is said to be one of them, yet this is really a reinforcement of the importance of anti monopoly provisions in the area of newspapers and tv channels. The main aim is to keep these markets competitive or to encourage more competition. They do not seem to apply to state broadcasters, in the usual asymmetric EU way.

Defence businesses may also operate under stricter and more comprehensive rules. In practice anyway government has a major role in deciding whether a defence business takeover or merger goes ahead, as the state is the main customer. It would be odd indeed if someone sought to  buy out a defence business in the UK that the UK government did not like, as they would not be able to sell the product to the home market, and the overseas sales are heavily regulated by the government. Sensitive technologies of importance to UK defence are protected by official secrets laws.

There is now also an additional criterion allowing government to intervene if a merger might threaten the stability of financial markets. Again this is little more than an underlining of the competition rules in the banking and financial sectors. Only very large mergers are likely to  cause problems under this clause, and they could also be ruled out on the grounds of market share in most cases as well.  Anyone seeking to buy a financial business would be well aware that it has to remain a regulated business, where the Financial regulators can force any requirements on the business they like when it comes to capital and conduct.

Mr Miliband now says he wants a national interest catch all clause br0ught back. He might find this is against the EU law on  this topic, which could cause him some embarrassment as a good European enthusiast. He will also need to explain on what grounds government should intervene apart from competition under this new clause, and try to persuade us how a government Minister would be a better judge of these things than the owners of the company concerned.  He will also need to reassure us that this is not some further anti rich foreigner rant of the kind we are becoming used to from his party. It is always easy for a company to make all sorts of generous promises to the workforce and about investment plans  when trying to buy a company, but nothing to stop them changing their mind after the event or if circumstances change.

There are good foreign takeovers of UK companies and bad ones. I do not defend the right of foreign interests to buy UK companies on the grounds that the new owners will always be successful business people, or that they will always act in the interests of a UK workforce. Like British owners of businesses, some will prove talented and resourceful backers of the businesses they buy, and will grow them successfully here. Some will grow them worldwide. Some will do badly, or will strip assets out, just as some home spun entrepreneurs do.  I just don’t think government Ministers would be good at deciding who are the good guys to be trusted and who the bad. Nor do I think British owners of businesses will prosper as much  or work as hard if they know they will not be allowed to sell to the best bidder when the time comes.


  1. Patryk
    May 6, 2014

    That’s a classic example of double think, Mr Redwood. You don’ think that government ministers should decide which foreign investor can take over a company but you do think that government ministers which foreign people could be employed by private companies and their owners. Where is the consistency?

    1. yulwaymartyn
      May 6, 2014

      Patryk: There is none. Its all a case of what suits.

      1. Hope
        May 6, 2014

        The short answer is, No. Technology should be kept in the country to allow industry to flourish and the country flourish in the competitive world. Allowing a company to buy then dumb down or do whatever it wants is not in the national interest. Hence that is why Hollande has intervened with GE’s takeover in his country. FTT should be stopped as it will impact on our biggest industry, the finance industry. No ifs or buts, stopped.

        Time to get out the EU it holds no benefits to the UK and certainly none above the detriments to our lives and costs.

    2. acorn
      May 6, 2014

      Patryk, you are looking at this from the wrong end of the universe. Your post would inspire a Thatcherite type quote such as “where there is consistency we will bring hypocrisy”. You know what I mean; St. Francis of Assisi, Maggies favourite glory hunter.

      “The major problem—one of the major problems, for there are several—one of the many major problems with governing people is that of whom you get to do it; or rather of who manages to get people to let them do it to them.
      To summarize: it is a well-known fact that those people who must want to rule people are, ipso facto, those least suited to do it.
      To summarize the summary: anyone who is capable of getting themselves made President should on no account be allowed to do the job.”
      ― Douglas Adams, The Restaurant at the End of the Universe.

  2. Anonymous
    May 6, 2014

    “What do we make in Britain ? We’re useless !”

    “Ah. But we’re world beaters in pharmaceuticals.”

    A pharmaceutical industry which has had much investment via the NHS. The US has a history of asset stripping our businesses and sacking our people – she has been extremely unfriendly to Britain in this respect.

    No other advanced industrial nation behaves the same way as Britain when it comes to strategic industries.

    1. Iain Gill
      May 6, 2014

      Yes the line of argument used by John would be fine if the major competitor nations acted in the same way. But they don’t! We cannot unilaterally offer free reign over our assets.

      1. Iain Gill
        May 6, 2014

        And unlike most people I have
        1 Worked abroad a lot, and done my best to do business on behalf of this country.
        2 Know Pharma VP level folk
        3 Have been involved in Pharma mergers and acquisitions professionally
        With this in mind it is my sad duty to inform John that my view is the UK is being taken for a mug

        1. margaret brandreth-j
          May 9, 2014

          David Sainsbury writes in the Guardian that if David Cameron allows the take over it would lose him the election and the British would never forgive him . It would be a loss to science and research and development and would throw us out of scientific race for good. He says that the company propose to buy it and divide it into three parts, thereby asset stripping it. He comments that it is actually the weaker company bidding for the stronger company to actually bring it down.

      2. libertarian
        May 6, 2014

        Iain Gill

        I think that if as you claim to have intimate knowledge of these things then you would know that other countries actually behave no differently to the UK. One look at takeover activity and the current structure of large numbers of multinational firms is enough to prove that

        1. Iain Gill
          May 7, 2014

          Pharma companies buy and sell individual manufacturing and distributions sites amongst themselves all the time, its a very fluid situation where deals are constantly done according to what can be produced where most cheaply at any given time (largely driven by regulators shifting which countries production they trust etc).

          Intellectual property is another matter entirely, it is fought over tooth and nail, not just the drugs IP but the production techniques IP the software IP and so on. (although they do outsource stuff to countries which leak IP and make massive mistakes there).

          The sales channels are also kept strictly under control.

          The power is the IP and the sales channel.

          1. libertarian
            May 8, 2014

            Iain Gill

            Yes so how do you square that with what you first wrote about other countries protecting their industries more than us? Because in fact they don’t.

    2. Richard1
      May 6, 2014

      We often hear that no other country would permit such a deal – where’s the evidence for that? France might not, but there socialist dirigisme rules and look whats happened. It is simply not true that other developed countries run protectionist, mercantilist policies preventing acquisition of major companies. There are occasional cases – Canada has been guilty for example, but they are the exception not the rule. Astra Zeneca is itself the result of a cross-border merger. Cadburys – also a deal which some say should have been blocked, largely consisted by the time it was bought of acquired international subsidiaries. All the best performing major economies have been open to international investors, including to strategic transactions involving change of control of major companies.

      Reply: All EU countries are under the same EU merger control and Competition law, so it does not matter very much what the individual member state govearnments think about it.

      1. Hope
        May 6, 2014

        Not sure this is correct, JR. National security is a reason. Technological advances I suggest are national security issues whether that be weapons, intelligence or economics. But of course, Heath, and Co felt giving away industry was a price worth paying ie fisheries. Major wanted to give away our currency!

        Reply National security means defence, not drugs. Dr Cable confirmed my view in the Commons today.

        1. Narrow Shoulders
          May 6, 2014

          Vince the foresightful may have confirmed this to you in the Commons but might that conformation have been driven by his opinion rather than legal fact?

        2. Richard1
          May 6, 2014

          France sought to block a deal for Danone because yogurt etc is strategic. Here various people made the same case for Cadburys which makes confectionary. If these kind of subjective criteria are to apply to approval of commercial deals every company of any size will be strategic and deals will be decided not by shareholders but by political or bureaucratic whim.

      2. libertarian
        May 6, 2014

        Richard 1

        You are absolutely correct, and in fact even France is not immune . The French nationalised car maker Renualt is now part owned by Nissan.

        1. sjb
          May 8, 2014

          Renault was privatised in April 1996[1]. The two companies have cross-shareholdings: “Renault holds a 43.4% stake in Nissan, while Nissan holds 15% of Renault shares. “[2] But Nissan’s shares have no voting rights.[3]


  3. Antisthenes
    May 6, 2014

    Indeed takeovers or foreign investment of and into UK companies is none of the governments business unless as you rightly say it curtails competition or national security maybe compromised. What is the governments business is to create an economic environment that encourages Johnny foreigner to invest, takeover companies and enlarge their operation in the UK and move their business here from where they operate in other parts of the world. The Conservatives will make a better job of creating that environment than Labour. In fact Labour in government will almost definitely see flight of capital and business out of the UK. We know why that is lefty policies and practices destroys wealth creation which they are too dumb to recognise is killing the goose that lays the golden egg that the left needs to fund their ill thought redistribution and social engineering.

  4. Alan Wheatley
    May 6, 2014

    I would say that is a well reasoned analysis of the subject.

    A related subject is the issue of why it is that well established and respected British brand names fail to remain competitive only to return to success under foreign ownership. For instance, in the car world: Aston Martin, Bentley, Jaguar, Mini, Rolls Royce to name but a few. And you can still buy QUAD Hi Fi products, but the company is now foreign owned.

    Is this a disappointing indication of poor British management, unimaginative venture capitalism, or what?

  5. Lifelogic
    May 6, 2014

    You are surely right in all you say above.

    Particularly when you say “Monopolies are bad things, allowing companies to overcharge, provide a bad service, and fail to invest and innovate. That’s something the public sector knows all about from some of its own activities.” Government monopolies (or near monopolies) where government even can even distort all the rules for competitors are often a complete disaster. This we see in the three letters 1000 a month, N H S, the education systems, defence, the legal system, the police for example in the Hillsborough aftermath, planning, building control, council housing, immigration controls (where there are any) and endless other areas.

    There just kill the competition with state subsidies, or laws then take over nearly whole industries then make a complete pigs ear of them.

  6. margaret brandreth-j
    May 6, 2014

    Bring back ICI. If they don’t want to intervene then they should.Selling outside the UK will only mean more harm.Freedom to execute business and sell out, should exclude any potential harm to the UK.I don’t believe that new buyers will work in the best interests of the UK and its workers. Why do we want to give away more of our power and best companies? All the time the UK is damaging itself by selling bits off.
    I get the impression that there are double agents out there ready to win the third world war and swallow us up. They threaten the imperial past which agreed, did much damage and then subsequently provided stability.Why do we want to bury ourselves all the time?
    To me it always feels that we are speaking for the victors, that we are influenced by the overseas and words which come out of the mouths of the Europeans are heard by us and which we cannot do anything about. We are in perdition of our own identity and being. If money talks, and it does , then the abroad personalities will have to gel with the UK workers. The company will not say’ we now have to work according to UK standards,’ They will say comply with us or else!

  7. Mike Stallard
    May 6, 2014

    I do not know anything about all this. (Except that Dan Hannan MEP maintains, as does Roger Helmer MEP that the big businesses of Europe are awfully good at lobbying…)

    But at least I say so.

  8. Andyvan
    May 6, 2014

    In a free market monopolies would be extremely rare because as their service declines in quality (as all monopolies do) someone would always undercut them. Government creates and supports monopolies by excessive regulation which existing large business can absorb in it’s cost structure but new small business cannot. This is amply demonstrated in the banking sector. Every single existing high street bank is poorly managed, costly to run and would be immediately undercut by new innovative banks if they were not protected by the state. Where it not for government pretending to protect us (whilst actually doing the opposite) we would have many more new well run and responsive banks to choose from. They support the existing big banks because the state-banking money go round would collapse without that support.
    When the state uses anti monopoly legislation against mergers or sales of companies it is more often to protect vested interests then consumers. The EU laws are useful to our government because they can now blame each other for blocking deals whilst helping their friends in boardrooms. Always good to ensure you’ll get a nice fat directorship or consultancy when you finally get kicked out of parliament.

    1. waramess
      May 6, 2014

      You are right but competition is the stuff of life; it keeps everyone on their toes and keeps them honest.

      There can be little doubt that the corporate sector will always attempt to buy up the competition because keeping on your toes and being honest is an uncomfortable way to do business.

      Whatever one thinks of government, and I for one have an exceedingly low opinion, the one thing they might be able to do with competence is fulfill this particular role with a robust enthusiasm . I shan’t however be holding my breath

  9. Leslie Singleton
    May 6, 2014

    Miliband is of course sounding off on this and much else recently according to what he thinks will appeal to his potential supporters. It is a disappointment that apparently so many of my fellow countrymen buy his nonsense. Socialism may have a superficial, specious, attraction but it has the ever so slight disadvantage that it just plain doesn’t work. On length of tenancy, and speaking as one who rents, is he saying that I have to be compelled to commit for three years even if I don’t want to (which I don’t)?

  10. Narrow Shoulders
    May 6, 2014

    The everything is for sale to anyone mentality has resulted in much of London overpriced and uninhabited, no investment in nuclear or other non heavily subsidised generation capacity and UK IP being used in global manufacturing with no royalties payable. A recent blog invited the question of what we sell when the cupboard is bare?

    Our subsidised by tax credits imported workforce can often not compete on price with lower wage economies so often technology and knowledge are our best weapons in income generation. Why give this advantage away whatever the short term price obtained.

    Protectonism has an increasing place in a globalised market.

  11. Gary
    May 6, 2014

    In a free market nobody except the company shareholders should sanction a sale. In the rigged world of big govt, it appears that this is a tax dodge takeover and the company may have no worth outside of that. It will probably be asset stripped.

  12. oldtimer
    May 6, 2014

    You are absolutely right about government intervention in these matters. The only rule of thumb that works is that ministers can be relied on to get it wrong.

  13. A different Simon
    May 6, 2014

    Would British companies be able to own and operate utilities in France in the same way as French companies are allowed to operate here ?

    Perhaps their should be a reciprocity test or a lowest common denominator test .

    I can see Mr Milliband’s ultimate solution to a corporate action he doesn’t like being to nationalise the entity concerned .

    A greater issue than this topic is the systematic Govt driven de-industrialisation of the UK over the past over 3 decades due to political dogma , the new green religion being the latest example .

    Amazingly it’s not just LibLabCon which want to offshore industry but the TUC and CBI too .

    1. libertarian
      May 6, 2014

      A different Simon

      Would British companies be able to own and operate utilities in France in the same way as French companies are allowed to operate here you ask. The answer is Yes

      3 years ago the nominally “UK” company International Power took over France’s GDF Suez

      1. sjb
        May 8, 2014

        3 years ago the nominally “UK” company International Power took over France’s GDF Suez

        That’s odd because two years ago, GDF Suez[1] “agreed to buy the 30 per cent of International Power it does not already own for £6.4bn.”[2]

        [1] 35% owned by the French state

  14. Nick
    May 6, 2014

    Should the government have taken over pensions?

    Spend the cash, leave the debts.

    Current payouts 5.7K compared to 28K plus 836K in a fund if the money had been invested.

    No wonder MPs want to discuss other people’s take overs and not their own mess.

    Meanwhile the party that takes and doesn’t make lurches towards economic fascism

  15. Aatif Ahmad
    May 6, 2014

    The EU Acquisitions Directive tried to introduce a liberal regime in the financial sector so that national authorities could only deny approval on objective grounds relating to the proposed acquiror’s financial soundness and reputation, and not subjective grounds such as the national interest. So, contrary to what some people think, not all EU legislation is bad.

    What is bad, however, is the free sale of assets, such as real estate and companies, by a country which is running a current account deficit and where that deficit is partly the result of excessive borrowing by the government and the household sector, as in the UK, underpinned by unnaturally low interest rates and money-printing. Effectively, the UK is selling its family silver in order to pay for its consumption.

  16. Richard1
    May 6, 2014

    Absolutely right. It should be up to the shareholders who own the company to decide whether they want to sell it. If the government starts the sort of interventionism being called for, even by some people supposedly on the political right, there will be no end to it. Every time a ‘foreign’ company wants to buy a ‘British’ company there will be calls for intervention to protect jobs, an ‘ industrial base’ (a meaningless phrase) or some other vague strategic reason. Astra Zeneca itself wouldn’t exist if the Swedish govt had adopted this sort of nonsense 15 years ago. British companies wouldn’t be able to buy companies in other markets as those governments would adopt the same mercantilist protectionism.

    Some takeovers succeed and some fail. But history and experience shows that the markets are a much more effective allocator of capital than politicians and bureaucrats. The government should stay right out of it.

  17. Roy Grainger
    May 6, 2014

    As you note Ed’s “national interest” clause will surely be ruled illegal under EU law – imagine it the company taking over Astra Zeneca were German – I also read his plan to renationalise the railways would fall foul of similar EU law. He really should decide if he wants to be a good European or, as his position seems to be, withdraw from the EU so he can implement his policies.

  18. Richard1
    May 6, 2014

    Your para on Miliband’s predictable posturing on this raises an awkward question. As you say, Miliband’s proposed interventionism might be against EU law. One of the reasons I decided I was pro-EEC when I first voted was because I saw the EEC at the time as a relatively pro-market force which would act as a bulwark against the catastrophic socialism of Labour in the 1980s, had there ever been the disaster of a Foot or Kinnoch govt, which fortunately there wasn’t. (The Labour Party at the time were in favor of leaving the EEC for this reason). It is becoming increasingly clear that Mr Miliband is still at heart the Marxist he was brought up to be. no doubt he would privately agree with the fashionable rubbish published by M Piketty the French leftist, calling for 80% taxes. This being the case should we on the pro-market right start to regard continued EU membership as a possible protection against the damage which would be wrought by a Miliband-Balls government?

  19. The PrangWizard
    May 6, 2014

    If you want to live in a free society you need to permit private property, and allow people to sell and buy property as they see fit.

    I have commented previously on your views on national identity and what defines it when you have claimed to be an ‘Englishman’; but only an ‘Englishman’ subsumed in a British State to which you give primacy. Remember readers, England does not have a parliament of its own, the people of England are ruled from a parliament where Members from other nations are encouraged to participate. I thus cast doubt your belief in the nation state, at least the nation state of England. I will leave your references to the EU aside.

    So let us imagine a nation, the total free market type which you define above and private property, the physical. In this nation, its land and buildings are continually purchased by cash rich foreigners, including your own house which you willingly sell and it is leased back for a few years. This happens to all land in your nation so eventually all land is foreign owned.

    At that point whose nation are you living in?

    1. waramess
      May 6, 2014

      Well,on a point of order, all land in the UK without exception is owned by the Crown and held by purchasers in “Fe Simple”-simple faith.

  20. Lifelogic
    May 6, 2014

    With particular regards to drug companies, patents and intellectual technology the patent systems needs freeing up and improving. It should encourage developments or new technology but so very often now it puts huge barriers in the way of such improvements.

    Rather like Microsoft and Apple’s non open source software so often does in computer technology. There is huge scope for improvements for humankind through opening up and improving patent and software protection laws.

  21. Iain Gill
    May 6, 2014

    Internationally most of our big competitors do not share your view that “If you want to live in a free society you need to permit private property, and allow people to sell and buy property as they see fit” indeed we put a whole lot more restrictions on it already than you highlight.
    I know other countries where there are lots of incentives and sometimes compulsions to keep intellectual property in that country. Where trade secrets are kept to the local population and not exposed to foreigners. Where punitive taxes are applied if assets are sold to foreigners.
    It is the job of the government and regulation to protect and defend the British people. In lots of multi-dimensional ways. This country is being taken advantage of by the rest of the world in lots of ways, and it’s about time the political class woke up and started defending the population of this country.

    1. libertarian
      May 7, 2014

      Iain Gill

      Until you actually understand IP I would refrain from making statements about it if I where you.

      Name ONE country that aims to keep IP in that country. The WHOLE point of IP is to protect your IP in OTHER countries.

  22. English Pensioner
    May 6, 2014

    As most of the shares in these large companies are owned by pension funds, investment trusts, etc, there are always concerns whether they are prepared to sell out for short term profit (and bigger bonuses) rather than support the company in the longer term.

  23. Old Albion
    May 6, 2014

    I don’t know the answer to your question, but i’ll tell you what i do know.
    I used to work in Dartford Kent for Burroughs and Wellcome. (pharmaceuticals) Which became Wellcome and floated on the stock market.
    Soon we became Glaxo-Wellcome and then Glaxo-Smithkline.
    Now the Dartford site has been razed to the ground and 3000 people have lost their jobs.

    1. libertarian
      May 7, 2014

      Old Albion

      Yet an Glaxo Smith Kline is the worlds 4 th largest Pharma Company and using the criteria being used by others in this discussion is a UK company and the 3 organisations that make it up are also nominally UK co’s. So keeping it in house makes no difference. As I’ve said all along its not about the nationality of ownership its about jobs, revenue operations and taxes in tho country

  24. A different Simon
    May 6, 2014

    Why does the Government let foreign speculators buy UK land and the residential property which sits on it ?

    This distorts the market so that prospective domestic owner occupiers are disadvantaged .

    Reserve land for UK residents and take other measures to drive down the cost of accommodation and there will be no need for wages to rise .

  25. Tad Davison
    May 6, 2014

    John wrote:

    ‘Then government does intervene to prevent the accumulation of monopoly power by private interests.’


    ‘Monopolies are bad things, allowing companies to overcharge, provide a bad service, and fail to invest and innovate. That’s something the public sector knows all about from some of its own activities.’

    and then:

    ‘Some will do badly, or will strip assets out, just as some home spun entrepreneurs do.’

    Many commentators have said that the company in question has a track record of asset-stripping – particularly intellectual properties – then dumping people out of work. We certainly don’t need the obliteration of good innovative companies, or the job losses that brings with it, but I wonder if that matters to the shareholders, provided they get a good profit out of the sale?

    On a much wider point, I wonder if people really take the time and trouble to read up on the way large corporations work? Frankly, I’m troubled by them, and feel they can, and often do, lead to a kind of corporate (authoritarianism ed) – particularly in the United States, where of course, this one is based. A situation where too much power is in the hands of corporations instead of the people, is surely a bad thing, and goes against the basic principles of democracy. If AZ does get taken over, it will be interesting to see the eventual outcome, especially in this fair city.

    Tad Davison


  26. Vanessa
    May 6, 2014

    I think this is a bad takeover. It will certainly damage competition by making the merged company the biggest pharmaceutical organisation and therefore “untouchable”.

    Other countries have laws in place which stop this kind of huge takeover. I seem to remember Cadburys was sold with “promises” not to lose jobs in this country and other promises which were promptly reneged on. I think we should be a lot more careful who buys our large companies; it is usually to make even more money which is just greed in my book.

    Having said all this the government should keep out of private enterprises and stop trying to manipulate the markets. Politicians usually get everything they touch disastrously wrong.

  27. forthurst
    May 6, 2014

    Should the ownership of successful British businesses which provide employment here and elsewhere and, in particular, typically, for those whose ability to create significant added value as a result of their intellects and training, which some deem as necessary or even essential if we are not to continue to slip down the international competitive ladder on a per capita basis, those that Cameron purports to believe we need, be decided by City operatives,( etc ed)? Astra-Zeneca’s shares have suddenly appreciated by 15% as the aforementioned lick their chops, despite that fact that the less successful Pfizer is offering nothing but paper.

    The rules for determining takeovers are totally flawed and have never worked satisfactorily. The British electrical engineering industry was wrecked by allowing a (word left out ed) accountant from taking over most of it and then not investing in internally funded r & d. Much damage was also inflicted by cretinous politicians, mainly Labour, who believed that bigger is better, and by doing so managed to create larger failing enterprises, e.g. British Leyland or ICL.

    There should be muliple grounds for which takeovers can be blocked which all correspond with the national interest. It is wrong to assume that the adequacy of competition can be assessed purely on market share: e.g did the supermarkets where there were six competing national chains, between them, address the needs of the market? Much like the three established political parties, they competed but not in a way as to address the needs of the whole market, hence Aldi, hence UKIP. Take the case of Cadbury, a successful British enterprise, innovative in confectionary products, providing much employment sold to a (word left out ed) US business; was that in the national interest, even if the predator company had the cash so would not need to make short term costs savings, even if the undertakings given were ever intended to be honoured?

    Capitalism should be about agile companies competing to satisfy the needs of markets, some competing through superior intellectual property, some by innovative marketing, not about takeovers to enrich City slickers who do not ever add value. Generally speaking, takeovers should be blocked unless the target is failing or, as in the case of Jaguar LandRover, where the owner was totally unprepared to make the necessary investment for it to compete successfully, or if it is a small niche player that voluntarily seeks a parent company for its funding and marketing reach.

    Protecting British businesses from foreign asset strippers is to promote a vital national interest; without our few remaining World Class businesses we are a (less successful ed) nation because without successful businesses there is no wealth to fund public services.

  28. outsider
    May 6, 2014

    Dear Mr Redwood, Your argument that British owners of businesses will not “prosper as much or work as hard if they know they will not be allowed to sell to the best bidder when the time comes” seems even less pertinent to Pfizer/Astrazeneca than Mr Miliband’s apparent astonishment that all parties had agreed an almost uniquely open-door policy to foreign takeovers of big companies and had happily ceded control of international mergers and takeovers to the European Commission.
    Here we have one global pharmaceuticals group that depends on the US market trying to absorb another smaller global pharmaceuticals group company similarly dependent on the US market, at a time when most such groups have low sales growth.
    Since Astrazeneca on its own is quite big enough to compete globally, it seems quite clear that the main effect of the merger would be to reduce competition and potential competition. This would, I think, mainly be achieved by “rationalising” research and development and sales forces.
    Cutting out overlapping costs is the usual argument for monopoly. I am old enough to remember it being trotted out as a key argument for nationalisation of anything from steel to banks or hospitals.
    Would lower costs cut prices? I don’t think so. The pharmaceuticals industry depends on patent monopoly. The main defence against that essential monopoly is competing companies developing competing drugs, a defence that any such mega-merger must weaken. And if the world’s biggest patent medicines company can take out another top ten company, that would point the way for further mega-mergers.
    Pfizer, like some others, has been getting out of the more competitive elements of its empire and is being urged by Wall Street (or as you might say the hard-working owners) to get out of all non-patented medicines.
    Perhaps you remember the accountancy mergers that left only five, then four global firms, at such great expense to customers, or the bank mergers, which you are anxious to undo by diktat over the heads of shareholders.
    If your government were competent in such matters, it would be using all its diplomatic resources to make sure that the European Commission throws out this takeover on competition grounds tout court.

  29. Bert Young
    May 6, 2014

    I agree that MPs are not the best people to rule on take-overs ; very few of them have credible experience in business and commerce . There is , however , more at stake in the Pfizer / Astra Zeneca case . In the first place not only are there shareholders with a significant stake and interest , there are also many indirect investors via a plethora of investment funds . The employees are equally important in such a situation with their livelihoods and pensions at stake . Looking further down the line there is the taxpayer ; their interests are the vast sums invested in the education system that has been the life blood of the graduates and others who have founded the R & D and products of Astra Zeneca , and , another substantial party is the medical profession who prod and influence many of the lines of research that AZ pursue . So , such a take-over has to be monitored extremely carefully and , if deemed not to be in the public interest at large , over-ruled . If this is the case , who is it to to the ” over-ruling ” ? . The man in the street is not able to effectively participate ; the City can only do so indirectly; there is no such body such as a Take-Over Legalised regulator . It comes back to the H of C with its votes and opinions that can – and should , act in the interests of the electorate .

    1. Excalibur
      May 7, 2014

      A sensible and reasoned commentary, Mr. Young. However, it appears the EU and not the House of Commons is the final arbiter.

  30. David Cockburn
    May 6, 2014

    In general I agree with your position JR but in the particular case of Astra I know something about the company and am a shareholder.
    Firstly, it is a bit rich for the ‘patriots’ to describe it as a great British company as it is half Swedish. Second it hasn’t done very well until recently with a new CEO. It has had many research failures and its small molecule business is going nowhere. The biologics business is based in the US and will likely stay there.
    So I can well understand why AZN is in the sights of cash rich predators. However Pfizer has an even poorer record of success, its only boast is of how good it is at cutting costs. If its record at Pharmacia, W-L and Wyeth is anything to go by it will not be a good custodian.

    1. HY
      May 6, 2014

      Pfizer want AZ’s promising oncology pipeline

  31. Liz
    May 6, 2014

    I do not agree with this take over although normally in favour of a free market. However in these global take overs there is not a free market or a level playing field – no other country would allow this to go through and if it was AZ taking ofer Pfizers the Americans would find some way of thwarting it – ditto any European firm. In view of what happened with Cadbury and Kraft’s overt contempt for the British Parliament I think any assurances they give are not worth having and AZ will be asset stripped sooner rather than later if sold abroad. I am dismayed that David Cameron and George Osborne seem to be interfering on the side of the American firm – very naive and short sighted.

    1. libertarian
      May 7, 2014


      Total nonsense. More than 6,500 US firms have been taken over by foreign companies in the last few years. Please at least bother to check before spouting this stuff. Try googling European company takeovers. It happens all the time. The press made a hoo ha about this one and Cadbury’s but there has been many take overs only 3 years ago the UK firm International Power took over a French energy company. The part nationalised French Renault car company is now Part owned by Nissan, and the mighty Siemens of Germany sold its phone division to Nokia and its computer division to Fujitsu of Japan.

      Astra Zenaca a Swedish/UK/US conglomerate is ALREADY 27% owned by Pfizer anyway and actually isn’t a very well run company who have been delivering very poor returns. I’m not saying that Pfizer are any better but this constant pre tense that Britain is the only country who’s companies are sold is baloney and shows a total lack of knowledge about the business environment.

      87% of ALL companies listed on the Fortune 500 in 1955 now no longer exist.

  32. Kenneth R Moore
    May 6, 2014

    Another stitch up by foreigners wishing to take advantage of our far too laid back attitude towards the management of our assets.

    Rover is a case in point. ..

    BMW walked away with (a good deal ed)

    1. libertarian
      May 7, 2014

      Ken Moore

      They aren’t OUR assets, they’re not nationalised industries, they belong to the owners ( the shareholders ) or would you be happy for the government to tell you who you can sell your house to?

      Yes cos Rover was such a good company before it was taken over… not

  33. Kenneth R Moore
    May 7, 2014

    Why is it contentious to state that BMW walked away from Rover after cherry picking the best assets (The Mini Brand) and the Oxford factory, selling Land Rover for nearly 2 billion etc. These are indisputable facts not opinion.
    BMW paid Bae £800,000 for Rover and sold on a smaller company to Ford for over double that.
    When will we learn that take overs by foreigners often do not have our best interests at heart.
    I have worked with a senior manager who worked on the Rover V8 blockline under BMW management who tells me this is all true.

    Reply I did not have the facts to hand that you were citing to sustain your criticism of BMW. You also need to know how much BMW spent on new investment whilst owning Rover, how much they lost or made on trading etc.

    1. Richard1
      May 7, 2014

      BMW sold Land Rover to Ford – is that a big deal? Land Rover is still going and in fact enjoying something of a revival owned as it is by ‘foreigners’. Certainly the cars are much more reliable now than they were (I write as a former owner). As for the demise of MG Rover, please recall that that was another example of the baleful effect of government interference. There was a credible bid by the venture capitalist Jon Moulton. It was blocked for political reasons and sold to some union-endorsed employees from where it then went bust. We can’t be sure but Jon Moulton, based on his record elsewhere, would probably have made a much better job of it.

      1. Kenneth R Moore
        May 8, 2014

        I don’t criticise BMW for maximising it’s profit from Rover’s demise anymore than i would rebuke a dog for wagging it’s tail. It’s what companies do. Although a cynic might point out that the company largely held onto the parts of the business into which they had invested most heavily and sold the dregs to Phoenix.

        What I am critical of is our woeful inability in this country to capitalise on our assets, our crippling lack of foresight and love of selling out for a fast buck at the first opportunity. I’m also critical of our politicians strange attitude towards patriotism . the feeling that it is slightly beyond the pale to suggest that we should be proud that key industries are held in British hands and fight to keep them that way.
        I think it’s important that we keep control of our expertise and key companies although evidently Mr Cable and co. do not.

        Land Rover quality is good but not the best in industry. Just as Rover quality in the 70’s and 80’s wasnt the best but probably no worse than Fiat or Renault’s of that period. But the French and Italians don’t seem to have such an in build capacity to disparage their own industries. (and i speak as a former owner of a new Rover 2600 that was way ahead of it’s time and never needed anything except routine servicing).
        Who is to say what happened to Rover wont happen to Astra Zeneca – ie split up, asset stripped, parts that overlap with the American parent company assigned to the dustbin of history.

        Reply In a free society nothing stops British people owning their own companies and keeping them British. Astra Zeneca is partly owned by UK shareholders. They do not have to sell to Pfizer.

  34. Lindsay McDougall
    May 8, 2014

    The Government should, in extremis, allow it. However, there is no objection to rubbishing Pfizer’s reputation – on merit. A shareholder who accepts Pfizer shares, given that company’s declining portfolio of patented ‘blue chip’ drugs, and the resultant declining profits, is not thinking straight. Cash only, please.

    If Pfizer is successful, they will send back home more than money.

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