Merger madness rarely pays off, so why do firms still make these deals?

GeorgeHowell

Executive directors of PLCs prioritise shareholder value to the extent that it accords with their own best interests. But optimising their personal pay, perks, bonuses, pensions, pay-offs, status, career advancement, job security, physical comfort, and psychological well-being are I think very high on their agendas.

cepheus

I would have hoped to hear something about the loss to the UKs technical base and jobs which such a takeover might entail. Are you happy to see the UK reduced to a second class nation? It's quite shocking to hear this discussion revolving around what's best for small second hand owners which is all what most individual shareholders are.

The takeover is opposed by many scientists, politicians and trade unions.

Four British scientific bodies - the Society of Biology, Biochemical Society, British Pharmacological Society and Royal Society of Chemistry - have warned that recent mergers and acquisitions have led to lab closures, threatening the research base.

AstraZeneca has eight sites in the UK and about 6,700 employees

http://www.bbc.co.uk/news/business-27374068

chewmylegoff

cepheus wrote: »

I would have hoped to hear something about the loss to the UKs technical base and jobs which such a takeover might entail. Are you happy to see the UK reduced to a second class nation? It's quite shocking to hear this discussion revolving around what's best for small second hand owners which is all what most individual shareholders are.



http://www.bbc.co.uk/news/business-27374068

What would you propose? If companies access the stock market in order to raise funding for their activities then that means they are exposed to being taken over by other companies. If the government decides to control who a shareholder can and cannot sell their shares to on the basis of "what's best for British jobs" then what impact do you think that will have on the ability of companies based in this country to raise capital?

shortchanged_2

I wonder if this is a case for the Competitions and Markets Authority as the merger would create a massive company.

antrobus

chewmylegoff wrote: »

Although if Pfizer can transfer its tax domicile to the UK as a result of the takeover, which it appears to be able to, then it can shield large chunks of its global revenue from US corporation tax (in contrast to the US system, no UK corporation tax is charged on dividends received from overseas subsidiaries).

So may be worth paying £100 for something worth £90 if you get a tax saving of £20, which is perhaps the motivation here...

I'm not sure that your specific claim about UK corporation tax and foreign dividends is correct. But never mind, this isn't the Tax board, and I believe that it has been suggested that Pfizer does indeed wish to transfer its tax domicile to the UK, and that certain tax advantages would accrue as a result.

Which would make Pfizer a very big British company, wouldn't it?

martin2345uk

I work for AZ in Alderley Park. Can't tell you how worried I am right now, there's nothing worse than complete uncertainty. Only bought a house last year :-(

cepheus

chewmylegoff wrote: »

What would you propose? If companies access the stock market in order to raise funding for their activities then that means they are exposed to being taken over by other companies. If the government decides to control who a shareholder can and cannot sell their shares to on the basis of "what's best for British jobs" then what impact do you think that will have on the ability of companies based in this country to raise capital?

Take a long term view with more of a focus on supplying value to the country, like in Germany for example. Aren't a lot of these either family firms or funded through Bonds? My understanding is they have greater protection against foreign takeovers as well. They seem to do well, with less reliance on glorified gambling which all the secondhand stock market really is.

Taxpayers help to educate, protect and care for the employees used by the company, so everyone has an indirect investment, they should expect a better return than giving profits away to shareholders. Whoever owns it, the government gives them a licence to operate, subjects them to regulations and has the right to tax profits. That's the way democracy works.

antrobus

cepheus wrote: »

Take a long term view with more of a focus on supplying value to the country, like in Germany for example. ....

Like Vodafone and Kabel Deutschland? Vodafone has an awfully big German business.

cepheus wrote: »

... My understanding is they have greater protection against foreign takeovers as well. .......

Why, what's wrong with "foreigners"? Isn't it a bit xenophobic to be concerned about foreign takeovers? Complaining about the foreign ownership of British companies sounds a bit UKIP to me.

Oh look, here's a source!
http://www.ukipdaily.com/british-brands-foreign-hands/#.U3FGUyj4TTo

Generali

Seabee42 wrote: »

I think a lot of people can see its a tax dodge which is something I dislike even if the role of the directors is to maximise the return to shareholders.

What I find amusing is do you still think the sellers are overpaid if they are given shares in the combined company (i.e. the buyer) instead of cash. Which is now worth less with the value destruction. (Since this is often the offer).

I don't see where the tax dodge is.

The recipient of the new shares can sell easily enough. The market for shares in Astra Pfizer or whatever should be extremely liquid.

vivatifosi

The trend towards big, concentrated pharma has been going on for years and will continue whatever happens to Astra Zeneca. For example before Glaxo Smith Kline there was Smith Kline Beecham, before that, Smith Kline French and so on...

I did however hear an interesting comment piece on R4 that the UK was the only country in the developed world that does not have a full legal mechanism for intervening in M&A activity which it feels is counterproductive. That to me is far more concerning if true.