It’s strange that in all the coverage of the AstraZeneca-Pfizer story, few people have seen fit to mention that AstraZeneca is not technically a UK-owned company.
I’m talking not about the fact that it’s the product of a 1990s UK takeover of a Swedish company (many have pointed that out), but about something far simpler: who actually owns it.
Yes, the company is listed and headquartered in the UK, meaning it has lots of UK employees and UK assets – and must follow certain UK-determined rules. But only a quarter of the shares issued by the company are owned by UK investors. By contrast, about 46% of them are owned by American investors. And while the UK’s share has fallen quite sharply in recent years, it was rarely much higher than 40%, according to figures from Bloomberg.
So it would be more accurate to describe Pfizer’s £63bn offer as representing the proposed takeover of a primarily US-owned company by another US-owned company (Pfizer is 83.7% owned by US investors, with, as it happens, Britain the second-biggest investor at 5.3%).
And unless the UK Government (or EU authorities) were to intervene, the takeover will ultimately be decided by these overseas investors.
AstraZeneca is not alone in being primarily owned by foreigners – though it is less British than most. According to the Office for National Statistics, for the first time in history, the majority of UK-listed shares are owned by overseas investors. In 2012, the proportion of UK-listed companies owned by foreigners rose to 53.2%, up from about a third at the turn of the millennium and a mere 3.6% in 1981.
By contrast, the share of UK companies owned by UK individuals (as opposed to institutions) has fallen from over a half in 1963 to barely over 10% now. Those UK financial institutions, including pension funds and insurance companies, own about a third of the market. This is a trend which has been mirrored elsewhere around the world – but few countries have seen as great a shift away from domestic ownership to foreign ownership.
Now, share ownership is clearly not the only determinant of a company’s identity. Its traditions, its customs, its legal headquarters and its markets will play an important part in shaping the company’s character. For most of its relatively short life, AstraZeneca has been a relatively international company (run by a Frenchman with a Swedish chairman and a large UK workforce) with a British skew. And, in turn, a cultural identity contributes to the company’s relationship with government, and its decision-making about where it plans to make cutbacks or build its next plant.
But ultimately, a publicly-listed company has owners – shareholders – and it is to them that directors have a fiduciary duty. And in AstraZeneca’s case, only a quarter of those shareholders are from the UK.
UPDATE: Another thing I just noticed on the chart above – the proportion of UK shares owned by the Government is higher now (well, in 2011 and 2012 at 3.1% and 2.5% respectively) than at any time since 1981. That’s what a few bank bailouts’ll do for you…