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CT Taxpayers Gave $51 Million to $20 Billion Company

On June 19, 2012, Connecticut Governor Dannel Malloy announced that Alexion Pharmaceuticals would become the fourth company to collect taxpayer subsidies (aka, Corporate Welfare) under his "First Five" economic development initiative.

 

With much fan-fare, Malloy announced that $51 million in taxpayer funds were being given to Alexion Pharmaceuticals to help persuade the $20 billion dollar company to move from Cheshire back to New Haven where the company had begun in 1992. In return for the money, the company would also promise to create 200-300 jobs.

Thirteen months later, on July 13, 2013, Switzerland's Roche Holding AG, the world's largest cancer pharmaceutical company, announced that it's rounding up the funds to takeover Alexion Pharmaceuticals.

In 1992, Alexion Pharmaceuticals was opened by Yale faculty member Dr. Leonard Bell in New Haven's Science Park. Eight years later it moved to Cheshire. Bell remains the company's CEO.

So, with the development of Governor Malloy's "First Five" program, Alexion was one of the companies to put their hand out.

According to Connecticut Department of Economic and Community Development, Alexion's package included, "A 10-year loan of $20 million at a rate of one percent with principal and interest deferred for five years. Loan forgiveness of $16 to $20 million will be based on the creation of 200-300 full-time jobs; a $6 million grant for laboratory construction and equipment and Urban and Industrial Sites Reinvestment Tax Credits of up to $25 million."

At a press conference held by Governor Malloy and Mayor DeStefano, Alexion's CEO explained, "Our new headquarters in New Haven will support the rapid growth of our company as we expand our global mission to transform the lives of patients with severe and life-threatening ultra-rare disorders."

As part of the deal, Winstanley Enterprises, of West Hartford and Massachusetts is scheduled to build a "$100 million, state-of-the-art, laboratory and office building" at New Haven's "Downtown Crossing."

David Winstanley and his two sons, Adam and Carter have been in the commercial real-estate business for many years focusing on the acquisition and development of buildings within the Yale Science Park and facilities for ESPN, among others. In the last New Haven mayoral election, the Winstanley family of Concord, Massachusetts, gave DeStefano at least $10,000 and the family and its associates have donated over $26,000 to state-level politicians in Connecticut over the last few election cycles.

At the time of the Malloy/Alexion press conference, the Republican leaders of the Connecticut General Assembly, Senator McKinney and Representative Cafero, complained that a public hearing should have been held on the corporate aid package before the funds were turned over to the private corporation.

Senator McKinney was quoted as saying, "Ultimately, I hope this is a good investment for the state of Connecticut, but the public and the legislature have a right to know more about the deal."

But remaining true to their arrogant approach to criticism or the call for greater transparency, Governor Malloy's spokesman, Andrew Doba, blasted the legislators sayings, "With all due respect to the minority leaders, sometimes you get the feeling that they look for clouds on a sunny day."

At the time, Doba said the state's interests were protected, claiming to "have extensive safeguards in place to protect taxpayers, including collateral requirements, a 10-year residency requirement, job creation and retention targets and capital investment requirements."

But one year later, major storm clouds have, indeed, appeared on the horizon.

On Saturday, Bloomberg News broke that Roche Holdings, a company based in Basel, Switzerland, is trying to acquire Alexion.

Bloomberg News reported that Roche Holdings recently dropped its hostile takeover effort of illumine Inc., a $6.7 billion dollar pharmaceutical company and is instead turning its attention on purchasing Alexion.

According to Bloomberg News, "A takeover of Alexion would be Roche's largest since the company bought the portion of Genentech Inc. it didn't already own for $46.8 billion four years ago, the biggest biotechnology deal on record, according to data compiled by Bloomberg."

Bloomberg News went on to report that "a spokesman for Roche, declined to comment. Irving Adler, a spokesman for Alexion, said the company doesn't comment on rumors."

According to the news reports, "Alexion climbed 13 percent to $114.26 yesterday in New York, the biggest single-day gain since October 2008. Roche's American depositary receipts fell less than 1 percent to $64 . . . [And] Alexion's shares climbed as much as 24 percent in trading yesterday, matching a potential premium Roche could be expected to offer."

Interestingly, none of the stories about the potential Roche/Alexion deal made any mention of the Connecticut taxpayer's $51 million dollar gift to Alexion or the fact Alexion has "committed" to moving from Cheshire to New Haven and creating 200-300 jobs.

For additional background information check out:

http://www.ctmirror.org/story/...

http://www.governor.ct.gov/mal...

http://www.governor.ct.gov/mal...

http://www.bloomberg.com/news/...

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John Pelto
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