Is it all over for Pfizer? The board of AstraZeneca has this morning rejected its final offer of £69.4bn (£55 per share) for the company on the grounds that it fails to recognise its full value.
Chairman Leif Johansson rightly pointed out that Pfizer appeared to be primarily motivated by the tax advantage it would gain from being domiciled in the UK (where corporation tax is 21 per cent compared to the headline US rate of 35 per cent) and had failed to offer adequate guarantees over investment. He said:
Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimisation. From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case. The Board is firm in its conviction as to the appropriate terms to recommend to shareholders.
Provided that AstraZeneca's shareholders choose to approve its decision, the company will survive in its current form.
Labour's criticism of Pfizer's approach, and its threat to block the deal by introducing a new public interest test in May 2015, undoubtedly played a role in stiffening the board's sinews. Chuka Umunna, who grasped the significance of the bid (the largest proposed foreign takeover in British history) from the start, has welcomed AstraZeneca's decision this morning, tweeting that "In the decision of AZ's board we see the long term overcoming the short term, fast buck mentality we need to see less of in UK business" and that "We don't want to see the takeover of great British firms driven by financial engineering - we want them to be driven by long term investment".
The Tories sought to present Labour's demand for a tougher public interest test as crude state interventionism but it was hard for them to do so when figures such as Michael Heseltine, an economic adviser to the government, and Lord Sainsbury also questioned whether the deal was in the national interest.
Heseltine called for the introduction of "reserve powers" to protect British companies when assets such as the country's science base are at risk."Foreign takeovers can often be hugely helpful and I have no doctrinal preoccupations - I've done enough takeovers of small businesses myself to know how valuable they can be. But the important point is that every other advanced economy has mechanisms of some sort on a failsafe basis to scrutinise foreign takeovers and we're the only country that doesn't."
As Heseltine said, there is no major western country in which it is easier for a foreign firm to take over a domestic company than the UK. If Britain is to move towards the "responsible capitalism" championed by Miliband, this will need to change.
By holding out against Pfizer, AstraZeneca has set an important precedent that will deter future predators from seeking to capture more great British companies.