Remember all those industrial and investment promises Pfizer made when it was trying to snag AstraZeneca earlier this year? The body that polices U.K. dealmaking is eyeing new rules that would give it more power to enforce such promises, should Pfizer–or another company–come calling in the future.
The set of proposed changes to the U.K. Takeover Panel’s Takeover Code, announced Monday, would help the panel distinguish between a suitor’s broad intentions and its specific undertakings, the Financial Times reports. It would also help the panel apply stricter requirements to promises that fall into the latter category.
The request for new rules follows Pfizer’s failed $120 billion bid for London-based rival AstraZeneca, which came with a set of commitments from CEO Ian Read, meant to reassure the public about his company’s good intentions. Among them were vows to keep at least 20% of the combined group’s total R&D workforce in AZ’s home country and finish off construction of the U.K. company’s planned R&D hub in Cambridge.
But shareholders and other concerned members of the public questioned whether the U.K. Takeover Panel could hold Read to his word. With industry-watchers speculating that another Pfizer play for AZ could be on the horizon, sooner rather than later may be the best time to get those questions resolved.
Under the proposed rules, the panel would require any party that’s made deal-related undertakings to deliver periodic progress reports. The panel could also require companies to appoint an independent supervisor to make sure they follow through with their commitments, the FT notes.
If the governmental and public outcry triggered by Pfizer’s offer wasn’t enough to deter similar-minded bidders, additional scrutiny from the Takeover Panel could be, Jones Day partner Leon Ferera told the paper.
“Now that the panel has proposed these changes, parties to an offer will need to think hard about whether they want to give firm commitments,” he said. “There will be a number of additional obligations and costs that they will have to bear.”
But as the panel works on finalizing the changes–which will be complete by the end of the year, it hopes–deals for U.K. companies could keep on rolling in. So far, mounting U.S. political pressure hasn’t been enough to stem the tax-inversion tide, and Pfizer said last week that it’s bent on a tax-advantaged pickup of its own–whether or not AstraZeneca wants to be a part of it.
By Carly Helfand