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Essay / Research Paper Abstract
A 20 page paper discussing the option agreement Lufthansa made with BMI British Midland in 1999, which BMI owner Sir Michael Bishop exercised in late 2008. The contract provided only for specific monetary amounts and did not consider future changes in BMI valuation. Lufthansa was able to pay Sir Michael £100m less than contractually agreed and did take control of BMI in 2009, but the move was much less attractive in 2009 than when agreed in 1999. Bibliography lists 19 sources.
Page Count:
20 pages (~225 words per page)
File: CJ6_KSairLuftBMI.doc
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Unformatted sample text from the term paper:
business deals that are looked on as being only slightly lower in significance than finding the Holy Grail or perhaps the Ark of the Covenant, agreements that - when they
work - gain accolades, cheers and awe from onlookers, but when conditions change are no longer nearly as attractive as they were at the time they were arranged. Such
is the case for Lufthansa and its decade-old standing option contract to take over BMI British Midland. Doubtless when the agreement was signed in 1999 the move was a
veritable coup for Lufthansa while also flattering BMI with a marvelously high valuation of the BMI company. One of the few guarantees in
life and in business, however, is that things change. Internal conditions may remain rather static as external conditions take on totally new meaning, though in the face of such
dramatic external changes internal conditions cannot long survive unscathed. Several terrorist attacks and two recessions after the Lufthansa-BMI agreement was signed, BMIs Sir Michael Bishop has chosen to hold
Lufthansa to its promises, even as Lufthansa attempts every back-pedaling move it can imagine. The greatest lesson in this scenario likely is the
necessity of steeping formal, long-term contracts in sufficient amounts of legalese that will protect parties in the event of changes future to the time of the contracts creation. Overview
Generally when there is a "legal battle" over the possibility of one company taking over another, it is in the form of the would-be
acquiree resisting takeover by the other organization. Very rarely does it take the form of striving to force the acquiring organization to take over the acquiree! This is
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