US drugs giant Pfizer's £63 billion bid to takeover UK rival AstraZeneca has been rejected.
The American firm's latest attempt has sparked fevered debate among politicians, after it was rebuffed by Astra in January over a £58.7 billion bid. Critics fear that Pfizer could be an asset-stripping company and suggest that its commitment to relocate to Britain for tax purposes.
Former deputy prime minister Lord Heseltine called for the government to have "reserve power"s to intervene in foreign takeovers of UK firms when crucial interests are at stake.
The Tory peer, who is an adviser to Prime Minister David Cameron, told the BBC: "eEvery 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.
"I think that is a mistake and I think there are so many issues about the science base, about supply chains, about employment prospects that ought to be explored. I don't see any way in which this can be adequately done unless the Government has reserve powers.
"It's a question of where their headquarters are, where the decisions are taken, who determines what research is done and where, how much government money goes into supporting the science base within a co-operative arrangement, where the supply chains are going to be and what the motive is."
Science minister David Willetts told BBC Radio 4's Today programme: "We have been having very tough conversations with Pfizer and have made it clear to them that the British Government attaches great importance to the R&D activities happening here in Britain and also manufacturing.
"This is ultimately going to be a decision for AstraZeneca shareholders. But we've made it absolutely clear to Pfizer we have a life sciences strategy, it's aimed at boosting investment in Britain, it's working. We are putting in £1 billion a year of R&D in public money, business has been putting in £1 billion a year in private investment alongside us.
"We are proud of this strategy. We think a smart company would itself want to invest in and back it in one of the best places in the world to do business. I think Pfizer have been picking up very clearly those messages."
He added: "We are pressing Pfizer in a very hard-nosed way, and I have to say I have just seen their letter, and their letter has a set of proposals for research and development and manufacturing in the UK that have moved a long way from where they were a week ago. This is ultimately something they will want to pursue with AstraZeneca shareholders."
Labour shadow business secretary Chuka Umunna warned that the government seemed to be negotiating with Pfizer "over the head of Astra's board" by appointing cabinet secretary Sir Jeremy Heywood, and acussed ministers of "acting in concert with the Pfizer board on this".
He told Today: "What the Government is doing at the moment, negotiating, is quite unheard-of. It's extraordinary, unparalleled, for a Cabinet Secretary to be appointed along with another individual to negotiate with the bidder of a target company.
"What they are essentially doing is undermining the Astra board. There doesn't seem to be anything like the engagement with the Astra board that there has been with Pfizer, when Astra is the British company."
Willetts responded: "Both Vince (Cable) and George Osborne and myself have in the past week had conversations with AstraZeneca, to understand the AstraZeneca approach. Of course we need to understand AstraZeneca's view and we have made it clear that this would be ultimately a decision for AstraZeneca shareholders."
Umunna said: "There is grave concern in the business community and in the sector about this transaction. I have yet to speak to anybody in the sector who has anything other than reservations about this deal. Pfizer has a very poor record on previous acquisitions."
He added: "This transaction looks like one that's being driven by tax planning. The head of the beast, the central management of the new merged entity, will be in the US, it will still be listed over there. They are simply seeking to domicile here for tax purposes.
"Do we really want a jewel in the crown of British industry, our second biggest pharmaceutical firm, to basically be seen as an instrument in some tax planning game?"