STOCKHOLM (Reuters) - The Swedish government launched a fightback on Friday against U.S. drugmaker Pfizer’s (PFE.N) proposed takeover of AstraZeneca (AZN.L), which has half its roots and more than 5,000 staff in Sweden, highlighting the risks to jobs and science.
In an unusual move for the center-right government which favors an open economy, three ministers spoke out against the deal at a joint press conference, pointing to Pfizer’s history of job cuts after previous acquisitions.
The three - Finance Minister Anders Borg, Enterprise Minister Annie Loof and Education Minister Jan Bjorklund - said AstraZeneca’s shareholders should “seriously consider rejecting” Pfizer’s plan.
“We are saying that there are risks in terms of Swedish research, the entire life science cluster, and also potentially jobs in Sweden,” Borg said.
AstraZeneca, which was formed from an Anglo-Swedish merger 15 years ago, has rebuffed Pfizer’s current offer but the U.S. group is widely expected to return with a sweetened bid. AstraZeneca’s chief executive has not ruled out discussions at the right price.
Pfizer has given a five-year promise to have 20 percent of its research staff in Britain, where AstraZeneca has its headquarters, but it has not spelt out what this means in absolute numbers.
At the same time, the U.S. company has said that the overall research budget of a merged group would be lower than the sum of the two companies’ individual research budgets.
The numbers suggest Sweden is right to be worried.
Pfizer currently has around 11,000 staff working in research worldwide, while AstraZeneca has 9,000, and the two companies together employ 3,450 in Britain - 2,600 at AstraZeneca and 850 at Pfizer - representing 17.25 percent of the combined total.
But AstraZeneca plans to shed 400 research posts by 2016 as it moves to a new site in Cambridge, suggesting that research centers in Sweden and the United States will have to take a larger share of future job cuts if Pfizer is to hit its 20 percent target.
In Sweden, AstraZeneca employs 5,900 people, of whom 2,200 work in research and development (R&D), representing 25 percent of the independent company’s R&D total.
Borg and Bjorklund said they had spoken to the British government about their concerns that the deal was largely motivated by tax and cost cutting priorities. They also pointed to the experience of Pfizer buying Pharmacia, which led to big research cutbacks.
Sweden has in the past been reluctant to agree to European Union rules that would require public interest tests for business deals but Borg said Pfizer’s “semi-hostile bid” might force a rethink.
“Essentially, we want to retain an open regime, but at the same time, if you behave in the way that Pfizer is doing, then you undermine the legitimacy of that open regime,” he told reporters.
Borg, Prime Minister Fredrik Reinfeldt and opposition leader Stefan Lofven have previously expressed fears the $106 billion approach would lead to job losses in Sweden.
Borg, Loof and Bjorklund said in a signed opinion piece in the Wall Street Journal that the guarantees offered by Pfizer over retaining research and jobs in Europe were not sufficient.
“If there is no further clarity regarding the effects of Pfizer’s possible semi-hostile takeover of AstraZeneca, our conclusion ... is that AstraZeneca’s owners should seriously consider rejecting Pfizer’s proposal,” the ministers said.
“Pfizer’s potential takeover could be interpreted as a sign of short-term capitalism, which we believe is not in the interest of important life-science research in Sweden, in the UK or elsewhere.”
The ministers said that since 1999, Pfizer had acquired companies which together employed about 124,000 people. However, the net increase in its workforce since then was only around 25,000, meaning that nearly 100,000 employees had lost their jobs.
The U.S. company, which faced similar charges of ruthless cuts from British lawmakers this week, argued that such overall figures did not take account of businesses that had since been spun off. Pfizer also said AstraZeneca itself had reduced its British workforce by around 40 percent in the last few years.
Additional reporting by Ben Hirschler and Niklas Pollard; editing by David Stamp