Pfizer Inc.'s record of job cuts after acquisitions is nowdrawing heat from both sides of the Atlantic. U.S. and statepoliticians yesterday joined their U.K. counterparts in questioningthe economic impact of the drugmaker's push to buy AstraZenecaPlc.

Maryland Governor Martin O'Malley and Delaware Governor JackMarkell said they fear the deal will lead to job losses in theirstates in a letter to Pfizer Chief Executive Officer Ian Read. Theletter was released hours after Senator Carl Levin said he iswriting legislation to block U.S. companies from shifting theirlegal addresses overseas to avoid U.S. taxes, a move Pfizer hasproposed as part of the transaction.

The U.S. backlash follows Read's commitment to U.K. officialsthat Pfizer would keep at least 20 percent of the combinedcompany's R&D workers and substantial manufacturing plants inthe U.K. for at least five years. The governors wrote that theywant some assurances as well.

“Despite our requests, we have received no correspondingassurances about retaining jobs and research and development in ourstates,” O'Malley and Markell, both Democrats, wrote in a letterobtained by Bloomberg News. “Our concern is exacerbated by Pfizer'shistory of closing U.S. research facilities, including sites inMichigan and Illinois, after closing on previous corporatetransactions.”

While London-based AstraZeneca rejected Pfizer's $106 billionoffer last week, the New York-based drugmaker has told U.K.officials it isn't ready to walk away from the deal. Read is set tospeak about his proposal to buy AstraZeneca at two separate U.K.parliamentary committees next week.

Read may soon face government inquiries in the U.S. as well.Pfizer has said it plans to keep its operating headquarters in theU.S., even as it moves its legal address to the U.K. for the lowertax rate. In doing so, it would join at least 18 other companiesthat have said they are making or contemplating similartransactions since 2012, including Chiquita Brands InternationalInc.

Democrats in the U.S. Senate yesterday said they may pushlegislation that would block companies from shifting their legaladdresses overseas to reduce their tax bills. Levin, a Democratfrom Michigan, was joined by Senate Finance Chairman Ron Wyden inquestioning the ability of companies to redomicile abroad in orderto avoid U.S. taxes.

Wyden, an Oregon Democrat, told reporters in Washington he isconsidering quick action to prevent companies from “hollowing out”the U.S. tax base before lawmakers have the chance to considerbroader tax changes.

'Quick Steps'

Wyden said in an opinion article published in the Wall StreetJournal late yesterday that he wants to increase currentrequirements that U.S. companies reincorporating overseas have atleast 20 percent of stock owned by their foreign partner.

“I am committed to raising this floor to at least 50 percent”starting immediately, Wyden wrote, adding that “corporations mustunderstand that they won't profit from abandoning the U.S.”

Democratic efforts in the Senate will likely face oppositionfrom Republicans in the House. Representative Dave Camp, a MichiganRepublican who is chairman of the House Ways and Means Committee,said any attempt to address tax inversions like the one Pfizerplans should only be done in a broader revamp of the tax code.

Earlier this year, Camp released proposed legislation that wouldcut the U.S. corporate tax rate to 25 percent from 35 percent andtrim taxes on foreign income.

“I don't think this is something you can kind of one-off,” Camptold reporters in the Capitol. “So I actually prefer an approachthat really is actually going to create jobs and grow the economyas well.”

Pfizer spokesman Andrew Topen didn't respond to an e-mailseeking comment on Levin's proposed tax legislation. On April 28,Read said he didn't believe an acquisition allowing Pfizer to moveits legal resident to the U.K. would “create a conflict with theinterest of the U.S. government.”

While the tax issue spurred concerns in Washington, job cutswere on the mind of the Maryland and Delaware governors. O'Malleyand Markell told Read they want Pfizer to make some commitments totheir states. Read has reportedly told British Prime Minister DavidCameron that he would retain U.K. jobs.

Pfizer has a track record of cutting jobs and shutteringresearch labs following acquisitions. Since 2003, it has announcedplans to close at least seven research centers and shed about70,000 employees.

Governors' Questions

AstraZeneca employs 5,700 people in Maryland and Delaware,Markell, the Delaware governor, said in a telephone interview. Thecompany's North America headquarters is located in Wilmington,Delaware, there is a research center in Gaithersburg, Maryland, anda manufacturing facility in Newark, Delaware.

O'Malley and Markell decided to send their letter and make itpublic after reading about assurances Read reportedly provided tothe British government, Markell said in a telephone interviewyesterday.

They asked Pfizer to tell them details on how many jobs may becut or relocated from their states as a result of a deal, whatfuture investment they might get in the states and the drugmaker'spossible plans for splitting a merged company into differentbusinesses.

“We have 2,600 very good people in Delaware and 3,100 inMaryland,” Markell said by telephone. “My job is to do everything Ican do to make sure they have continued career opportunities.”

The governors didn't discuss the letter or operations withofficials at AstraZeneca, Markell said. They asked Pfizer torespond promptly to their request, and Markell said he received apolite phone call from a senior leader at the company who said hewould keep the governor informed of Pfizer's progress with theacquisition.

“We believe a potential combination with AstraZeneca would builda stronger company by bringing together our assets, people andscientific expertise to create vibrant businesses with newpotential growth and opportunities to meet patients' needs,” MackayJimeson, a company spokesman, wrote in an e-mail in response toquestions. He said Pfizer officials have spoken to the governorsand understand their concerns.

“Keeping us informed is very different from the kind of jobsthey have committed to in the U.K.,” Markell said.

Meanwhile, in the U.K., concerns about the deal continued tosurface. The Wellcome Trust, a U.K. endowment with 16.5 billionpounds that funds medical research, said in a May 2 letter to theU.K. government that it was worried about Pfizer reducing researchin that country.

“If AstraZeneca does merge with Pfizer or with any othercompany, we think it is essential that the R&D andmanufacturing capabilities it offers to the U.K. is maintained,and, critically, that its investment in its major R&D facilityin Cambridge is not lost,” William Castell, chairman of the trust,and Jeremy Farrar, its president, wrote.

Bloomberg News

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