Governors Martin O’Malley of Maryland and Jack Markell, of Delaware, have sent a letter to Ian Read, chairman and Chief Executive Officer of Pfizer, Inc., expressing concerns about the potential acquisition of AstraZeneca PLC.
The letter from the two Democrats highlight the possible impact on jobs in both Maryland and Delaware, and expresses concern about the company’s open interest in gaining access to offshore funds and “tax-efficient” operations.
Pfizer has proposed a $106 billion merger with AstraZeneca with the combined companies moving their legal headquarters to the United Kingdom to take advantage of tax breaks. AstraZeneca has rejected the merger offer.
AstraZeneca employs about 3,100 people in Maryland, and nearly 2,600 people in Delaware. Pfizer, which is now based in the U.S., is believed to be sitting on a large amount of cash it parks overseas for tax reasons. U.S. corporate tax rates are among the highest in the world and corporations use various strategies to reduce that rate.
In addition, the United Kingdom has set up tax incentives for the pharmaceutical industry, aimed, in part, at keeping AstraZeneca’s R&D operations and headquarters. AZ is moving a research center and headquarters to the university city of Cambridge.
In rejecting Pfizer’s offer, AstraZeneca also expressed concerns about the tax-driven structure of the merged companies.
The uncertainty prompted the two governors to seek answers about the company’s potential future in the two states. Delaware operations are now being downsized, with the final headcount expected to total 2,000. About 300 of the Delaware jobs are slated to go to Maryland.
The two governors also sent letters expressing concern to several federal executive branch officials.
The governors also highlighted Pfizer’s assurances to British Prime Minister David Cameron on job retention, potential relocation, as well as employment guarantees for workers in the United Kingdom, and noted that Pfizer has yet to provide any commitment to Maryland or Delaware.
The letter requests responses from Pfizer regarding the potential impact on thousands of residents in both states as well as a number of other issues, including: the potential number of jobs to be eliminated upon acquisition; commitments Pfizer is prepared to make to current AstraZeneca employees; future interest in investments in R&D and maintenance of innovation efforts; and answers to questions about potential redistribution of assets.
Both governors indicated that they intend to continue to pursue their concerns with the White House, members of the Obama Administration, and the U.S. Congress.
