Boss Ian
Read among senior figures at US drug firm to offload stock on 26 February and 3
March, regulatory filings shows
Pfizer's chief executive, Ian Read, sold $10.6m in shares in February. There is no suggestion of wrongdoing by any of the executives. Photograph: Luke Macgregor/Reuters |
Pfizer
executives made millions by cashing in their shares in the US pharmaceutical
firm, just weeks before renewing a £63bn bid for AstraZeneca.
Ian Read,
Pfizer's chief executive and public face of the takeover bid, sold $10.6m in
shares on 26 February, according to regulatory filings. Frank D'Amelio , chief
financial officer, sold $8.9m of stock on the same day. Other Pfizer executives
offloading shares included Loretta Cangialosi, the firm's principal accounting
officer and controller, who sold $3.1m in shares on 3 March. Mikael Dolsten,
the president of research and development, got rid of $2.1m worth on the same
day.
Pfizer made
its first overture to AstraZeneca's board in January, when it proposed talks
for a merger. After the British-Swedish drugmaker turn down the offer, Pfizer
renewed its advances on 28 April.
Pfizer's
share price has fallen by 9% since Read sold his for $31.99 a share in February.
Its shares were trading on Friday at around $29. This is the typical result of
making a takeover bid and there is no suggestion of wrongdoing by any of the
executives.
A company
spokesperson said: "These sales were within guidelines and during a
permissible period. The executives remain in compliance with their stock
ownership requirements."
Shishir
Malde, an expert in finance and accounting at Nottingham Business School, said
the share sale was not surprising. Companies bidding for a rival usually see
their share price fall, reflecting market scepticism about the success of
mergers, he said.
"The
vast majority of mergers and acquisitions are not successful because acquirers
tend to be overconfident about how much they need to put into bringing the two
companies together," said Malde. "The bigger the animal, the harder
it is."
Academic
research has shown that at least 70% of big mergers and acquisitions end in
failure, leaving shareholders no better off than before the tieup.
Bidding
companies, Malde said, often discover "skeletons in the closet" once
the takeover is completed, which can lead them to renege on promises. In 2010
the US food firm Kraft closed Cadbury's Somerdale factory, breaking a pledge
made during merger talks that it would be kept open.
Malde said
there were three groups of people who always benefited from mergers: the
directors of the bidding company, the shareholders of the target company and
the middlemen, the bankers and lawyers. "If those three groups want it to
happen, there is little anyone can do to stop it," he added.
The share
sale was revealed as Sweden's government stepped up the pressure on AstraZeneca
shareholders to reject Pfizer's offer. Writing in the Wall Street Journal, a
trio of Swedish ministers said Pfizer's guarantees on jobs and research were
insufficient.
"We
are worried about Pfizer's semi-hostile takeover process for AstraZeneca, and
what the effects would be for Sweden and the UK. The Swedish government has
learned to judge companies based on what they do rather than what they
say," said the article by its ministers for finance, Anders Borg,
enterprise, Annie Lööf, and education and research, Jan Björklund.
"Pfizer
has a history of quickly and sharply cutting staff in the wake of
acquisitions," they wrote. Dismissing Pfizer's claim that it had created
124,000 jobs since 1999, a period when the US firm went on a buying spree that
included taking over Sweden's Pharmacia in 2003, the ministers said: "The
net increase in Pfizer's workforce has only been roughly 25,000 since 1999,
meaning that nearly 100,000 employees have lost their jobs at Pfizer."
AstraZeneca
began in 1999 when Sweden's Astra merged with the UK's Zeneca, itself a
descendant of the British chemical company ICI. The Anglo-Swedish firm employs
6,700 in the UK and 5,900 in Sweden. The Swedish government collects more
corporation tax from AstraZeneca than any other Swedish company.
On Thursday
AstraZeneca's chief executive, Pascal Soriot, told the Guardian that the
drugmaker could be damaged by Pfizer's tax avoidance plans. He also criticised
Pfizer's intention to split the business into three separate divisions.
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“…I'm in Canada and I know it, but I will tell those listening and reading in the American audience the following: Get ready! Because there are some institutions that are yet to fall, ones that don't have integrity and that could never be helped with a bail out. Again, we tell you the biggest one is big pharma, and we told you that before. It's inevitable. If not now, then in a decade. It's inevitable and they will fight to stay alive and they will not be crossing the bridge. For on the other side of the bridge is a new way, not just for medicine but for care. Paradigms that have not yet been thought of, which don't represent any system that currently exists, will be created and developed by young minds who have concepts that the seniors don't know about. Things that don't have integrity today will fall over tomorrow. Just get ready. It's all part of what's on the other side of the bridge. And the old energy won't like it, and they will object. …”
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