Pfizer ($PFE) has managed to upset just about everybody with its $106 billion takeover offer for U.K.-based AstraZeneca ($AZN). AstraZeneca doesn't like it. The U.K. Parliament has launched an inquiry, concerned about possible losses of job and status. Some U.S. politicians see it as a tax dodge, and even a couple of governors are speaking out, fearing Pfizer will slash AstraZeneca jobs in their states.
Pfizer has promised that it would keep 20% of its research and development jobs in the U.K., but U.K. pols are unconvinced and will have Pfizer CEO Ian Read before Parliament in hopes of pinning him down, Reuters reports. His assurances to the U.K., however, have politicians in the U.S. thinking that to achieve the kind of cost-cutting it has done with previous buyouts, Pfizer will sacrifice jobs in the U.S. instead.
With 5,700 jobs at stake in Maryland and Delaware, the governors there have written to Read to let him know about their "deep concerns" about the planned deal. The U.K. company has about 3,100 people in Maryland, and another 2,600 people in Delaware, Reuters reports. The company told Bloomberg Businessweek it understands their worries and has spoken to them about it. But it also said, "We believe a potential combination with AstraZeneca would build a stronger company by bringing together our assets, people and scientific expertise to create vibrant businesses with new potential growth and opportunities to meet patients' needs."
A combo of the two companies might make Pfizer stronger, but it will weaken the U.S. tax base as Pfizer plans a tax "inversion." Senate Democrats are preparing legislation to take steps to stop that, at least in the future, and some Republicans are saying they are ready to give it a look, Bloomberg reports. Senate Senate Finance Chairman Ron Wyden told the news service: "I'm looking at steps that you can take immediately."
The Pfizer proposal is even being heckled from the sidelines. Swedish Prime Minister Fredrik Reinfeldt chimed in to the debate this week, saying Pfizer didn't keep its word to his country about jobs stability after its 2002 buyout of Pharmacia.
And the company's history speaks to just how deeply it is willing to cut to achieve the earnings it expects. One example was what it did after buying Wyeth in 2009. It said it expected to cut $4 billion in costs to help pay for the deal and initially said it expected to reduce headcount by about 20,000. Over the next 7 years, by cutting jobs and selling off units, the company had eliminated 51,500 positions.