Four banks called the price appropriate. The board negotiated everything that was not the price.

In June 2016 Midea, a Chinese appliance maker, offered 115 euros a share for KUKA, the robot manufacturer in Augsburg.

The offer was public and voluntary. Under German takeover law that means both boards owe the shareholders a reasoned opinion before anyone decides anything.

So the board had the number checked. Four banks produced fairness opinions. All four found 115.00 euros appropriate.

The price was settled. And that is where the negotiation started.

On 28 June 2016 the two boards published their opinion and recommended that shareholders accept. On the same day KUKA signed a separate agreement with Midea, running to the end of 2023.

Here is what is in it.

Locations and jobs stay. KUKA's strategy stays, and so does the Executive Board's independence over it. Midea will not pursue a domination agreement and will not take the company off the exchange.

The agreement also covers the databases. Customer and supplier data may not be moved to other locations, and Midea and third parties are kept out of them. The agreement calls it ring-fencing.

Four banks had already said the number was right. What the board could still work with was everything the number left open. Where the company sits. Who decides what it builds. Which building the customer data sits in.

Midea had said publicly what it wanted. The Chinese market, Industry 4.0, service robotics. Augsburg was not on that list. So Midea could promise to keep Augsburg without giving up anything it had come for. For KUKA, losing Augsburg would have been a serious loss. The same holds for the data and for the strategy.

The two sides wanted different things, and that difference is where the trading happened.

The board could sign locations, strategy and data because the board decided all three. One room, one day.

Everything a company negotiates belongs to the company. But the person sitting at the table is not always the person who decides about it, and does not always know what has already been promised elsewhere in it.

So there is a negotiation inside the company before the one with the other side. It settles what the person at the table can actually trade, and it depends on information reaching that person in time.

The duration is the only place anyone said out loud how hard this half was. Till Reuter, KUKA's chief executive at the time: "The agreed term of 7.5 years is much longer than what is customary."

What that sentence shows is that the term was something people worked on. How much longer than customary, he does not say, and the public record does not say either.

Here is what this story does not contain. What Midea conceded, in what order, or what KUKA gave up to get it. Nobody has published it. There is no account from inside the room. What exists is a compulsory disclosure and a signed agreement, which is the result and not the process.

That is what a settled commercial negotiation looks like from outside. What reaches the public record is what somebody was obliged to put there.

What is visible is enough for the part I care about.

An opening arrived as a number. The number was checked and settled by people whose job is checking numbers. And the agreement signed the same day runs seven and a half years forward on things the number never touched.

The number was the opening. Everything the board signed that day sits outside it.

Be well, Tina

Eleven patterns from conversations I had this year, about what actually decides a negotiation. One edition every Tuesday, then it ends. The Limited Edition Newsletter.