The French and UK Governments face tough decisions due to GE’s bid for Alstom and Pfizer’s bid for Astra Zeneca. Should they allow these national treasures to be swallowed by foreign owned (particularly American owned) companies? There is logic for both deals: significant synergies tax benefits and at least in the case of GE a likelihood that the new owner will do a better job of managing the businesses.
Assuming there are no competition issues the two governments should be focused on the likely impact for their economies. Most of the job losses in the Pfizer Astra merger will happen all around the world as the two companies consolidate their sales and marketing teams. On the research side job losses will be small and the UK may even gain since it is probably a lower cost location for research. In addition the tax advantages in the UK may bring some administration gains as Pfizer moves some HQ activities to the UK and some revenue gains due to the routing of sales through the UK. Of course there will be job losses at Astra Zeneca HQ. But on balance the UK should say Yes.
The French should say Non. The synergies for GE and Alstom will come from combining businesses closing factories and integrating sales teams. France is a more difficult environment for business than many other countries hence GE will be looking to reduce French operations before US or UK or Polish operations. The net result for the French economy is likely to be negative.
Andrew Campbell, is author of “Strategy for the Corporate Level” Jossey Bass 2014.