A very strange thing has happened lately. Plenty of ordinary people have got very excited over whether one large multinational company is going to buy another one.
This kind of takeover talk is usually relegated to the business pages.
Stranger still, we’re talking about the unsexy sector of pharmaceutical companies, following US drugs company Pfizer‘s £69 billion bid for the UK’s second largest drugmaker, AstraZeneca (LSE: AZN) (NYSE: AZN.US).
I could understand the public interest if they were looking to buy Manchester United, but a pharmo company?
I mean, can you name any of its products?
The £69 Billion Question
Yet the public is definitely interested. So the answer is yes, people really do care if one company buys another. And in this case, they are right to care, because Pfizer’s bid has big implications for the UK.
Rightly or wrongly, one reason people care is that the national interest appears to be at stake. Pfizer has been portrayed as the predatory US giant, looking to strip plucky British competitor AstraZeneca to the bone.
It has variously been compared to a praying mantis, leopard and shark. Cynics say it only wants to buy AstraZeneca as a tax avoidance measure.
Jobs are at stake. Highly skilled British jobs.
Hot Chocolate
We can’t forget what happened when US-based food giant Kraft sank its teeth into Cadbury in 2010. Barely one week after promising to spare its Somerdale factory in Bristol, Kraft shut it down.
We no longer trust the promises of multinational companies. As Kraft showed, they are about as much use as a chocolate teapot.
People care about Cadbury. They care about jobs. They care about honesty.
And they fear big business.
The Science Bit
Yet the Pfizer takeover isn’t that simple. AstraZeneca is an Anglo-Swedish company with a market capitalisation of £54 billion and research facilities all over the world. It is also big business.
It isn’t averse to culling jobs either, even British ones.
Last year, it announced 2,150 job losses as its Alderley Park research and development centre in George Osborne’s constituency, just five months after the Chancellor had helped it secure a £5 million grant to develop the centre.
Some of the country’s most skilled science professionals lost their jobs. Unions described it as a “massive blow” for north-west England.
This followed the loss of 7,300 jobs in a worldwide cost-cutting campaign.
AstraZeneca it isn’t just shark bait. It has teeth of its own.
The Drugs Do Work
The British can hardly complain about overseas competitors buying up home-grown companies. FTSE-listed companies rove around the world, doing exactly the same thing to foreigners.
Yet I’m glad ordinary people do care whether Pfizer buys AstraZeneca. We’ve neglected our manufacturing base for too long, relying on casino banking, property bubbles and rampant consumerism to pull us through.
I’m also pleased to see most of AstraZeneca’s shareholders reject the chance to make a quick buck from selling their shares at £55 a pop, up from around £38 when news of the bid just emerged.
That suggests that short-termism doesn’t always rule in the UK.
As fund management legend Neil Woodford has just said, our best chance of building a “sustainable future based on investment, manufacturing and exports” is by allowing technology-based industries such as life sciences to thrive and prosper.
And that is something we should all care about.
