BY Matt Atkins
UK Business Secretary Vince Cable has announced his intentions to tighten rules dealing with the foreign takeover of UK firms. The news comes after controversy which surrounded the failed takeover bid for British-based AstraZeneca, by US drugs giant Pfizer.
Speaking to the BBC, Mr Cable said foreign firms must be given no opportunity to shirk their responsibilities to UK workers and business interests. Foreign firms reneging on any promises made during a deal should be subject to financial penalties, under any new regime governing takeovers.
The enforcement of any new regime would also require legislative change, said Mr Cable, and he revealed broad agreement across the government for such measures.
Tighter laws to strengthen the 'national interest test' could also be in the pipeline, after concerns about the acquisition of major UK firms. As a 'last resort', the government needed to be able to intervene in dealmaking if transactions do not appear in the public interest. Currently, a formal public interest test only allows ministers to intervene when financial stability or media plurality are threatened.
Pfizer’s bid for AstraZeneca, raised concerns of job cuts as well as the loss of vital research and development carried out at the UK company. "What the government did then was to engage in negotiations to seek assurances. Where we now have to strengthen that is to make sure that where commitments are made, there is no wiggle room," Mr Cable told the BBC's Andrew Marr.
Pfizer gave a five-year commitment to complete AstraZeneca's new research centre in Cambridge, retain a factory in northern England and put a fifth of its research staff in Britain, but stipulated these pledges could be dropped if circumstances changed "significantly". To ensure in future that such assurances would be binding, Mr Cable said "we may well get into the area of having financial penalties" as a means of ensuring that companies stood by their takeover promises.
Such guarantees would prevent a repeat of a situation in 2010, which saw US foods group Kraft make a successful bid for British rival Cadbury with a promise to keep one of Cadbury's factories open. Kraft went back on this pledge shortly after the deal was completed.