Inside Track: Pfizer flop puts Soriot in tight spot

Mark Kleinman
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IF AT first you don't succeed, walk away and try again in six months: as City epithets go, it’s not exactly compelling.

But it sums up where Pfizer finds itself at the end of this week, unexpectedly jilted after a quartet of knockbacks from Astrazeneca.

The American drugmaker’s tactics were surprising. Its medicine cabinet was bare of new remedies to offer its British patient a week earlier than it needed to be.

Had Pfizer tabled a £55-a-share proposal last weekend but not declared its offer final, there is little doubt that Astrazeneca’s board would have been forced to open serious talks.

As it was, a string of testy video-calls ended without agreement between the two boards, and the biggest-ever foreign takeover of a UK company lurched toward the point of collapse.

Pfizer must have seen it coming. The original talks in January were barely any warmer, according to insiders.

Nevertheless, Astrazeneca has set itself hugely stretching targets if it is to vindicate such a peremptory dismissal of an offer which contained a handsome premium to its pre-bid price.

Leif Johansson, its chairman, talked a good game this week: Astrazeneca is better alone because of the risks to its improving pipeline from a Pfizer takeover, he said, while Britain is also better left unravaged by a marauding overseas predator.

And when a fund manager as well-regarded as Neil Woodford labels the efforts of a company’s boss “a miracle” – as he has in relation to Pascal Soriot – it adds further credibility to the company’s defence.

But Astrazeneca’s assumptions about its future prospects are heroic, especially in an industry with as many inherent product development uncertainties as pharmaceuticals.

Clara Furse at the London Stock Exchange and Tony Wray at Severn Trent both rejected takeover approaches and promptly saw their share prices spiral downwards.

By rebuffing Pfizer, Soriot has instantly joined this unwanted club. Recapturing the value for investors that they could have enjoyed from a successful bid might require another miracle.

There are some obvious merits to the establishment of a body focused on raising standards in banking, as proposed this week by Sir Richard Lambert, the former CBI boss.

A collective effort, with an independent overseer, will certainly be more credible than the piecemeal protestations of banks that they have already laid the foundations for a necessary cultural overhaul.

But there are holes, too, in Lambert’s Banking Standards Review Council (BSRC).

By washing his hands of any significant involvement in the industry’s pay debate, he has missed a trick.

True, as he suggests, remuneration is a matter for banks’ shareholders and regulators. But in the public’s mind, it is also the issue that most frequently reinforces the perception that banking is venal and self-serving.

Ignoring it therefore makes it less likely that the BSRC will be seen as comprehensively addressing the industry’s most pressing challenges.

The body’s inaugural chair may want to revisit that.

One obvious candidate for that role is Anthony Salz, author of Barclays’ internal standards report in the aftermath of its Libor fine.

I hear there is already support for him from some of the big banks – but given the circumstances, that might count against him.

Few people emerge from the Essar Energy takeover scandal with any credit, although fund managers say that one of those who does is Robert Hingley, the Association of British Insurers’ director of investment affairs.

The institutions which caved in and sold their shares at the first opportunity, however, have done themselves and the City a disservice.

Mark Kleinman is the City editor of Sky News @MarkKleinmanSky

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