Notes on Negotiation: Be Prepared/Leverage Is Fluid

Written by Marty Latz, Latz Negotiation Institute

Kellogg announced today it is buying Procter & Gamble’s Pringles business for $2.7 billion. Last April, Diamond Foods outbid Kellogg and signed a deal with P&G to buy Pringles for $2.4 billion in a mostly stock-based transaction. That deal was derailed by an accounting scandal at Diamond, which last week was forced to restate earnings for the past two years.

While Kellogg couldn’t compete with Diamond’s original offer because of tax savings generated by how it was structured, once that deal fell through, Kellogg swooped back in. From a negotiation perspective, two important lessons can be learned. First – be prepared. Kellogg could have given up and moved on ten months ago but they clearly were ready to strike when the Diamond deal fell through.  Second – leverage is fluid and timing is critical. By moving quickly, Kellogg took advantage of their improved leverage and reached an agreement with P&G before other potential bidders could get involved.

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Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts’ proven research.  He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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