Sta Hungry Stay Foolish

Stay Hungry. Stay Foolish.

A blog by Leon Oudejans

Take it or leave it

A deal is no longer a deal, in business and in politics. Businesses blame the coronavirus for their overpriced acquisitions (eg, Tiffany by LVMH, Grand Vision by EssilorLuxottica). The UK government blames “progressive insight” regarding the Brexit withdrawal agreement. Grand Vision won the first court battle, Tiffany is suing LVMH, and the EU may take the UK to court.

Sale and purchase agreements often include contractual clauses about adverse developments that occur post-acquisition. These clauses aim to prevent pre-acquisition window-dressing, which is rather common. Invoking such clauses may result in a (i) lower acquisition price, or even an (ii) annulment of the agreement. The former is rather common; the latter is rather rare.

Mid 2020, China unilaterally annulled the 1984 Sino-British Joint Declaration relating to the 1997 UK handover of Hong Kong to China. Several countries, including the UK, were quick to criticize China for not complying to international treaties (my 30 May 2020 blog).

On September 8, the UK government admitted in Parliament that the UK would be breaking the Brexit withdrawal agreement, when adopting new national legislation (eg, BBCFT). The irony over recent criticism towards China for breaking the Hong Kong treaty, was not lost on British MP’s.

Until today, the ramifications for China for breaking the 1984 Sino-British Joint Declaration appear to be limited. The reason is simple. From a geopolitical perspective, China is a giant, but the UK is a dwarf. Moreover, Great Britain could become Little England, after Scotland would leave the Empire. The British often display an intriguing mix of arrogance and ignorance.

The consequences of recent UK actions seem somewhat similar to a poison pill in acquisition agreements. If the acquirer wants to annul the acquisition agreement, then it must pay a very substantial amount to the company and/or the sellers. EssilorLuxottica aims to annul (i) the acquisition of Grand Vision and (ii) the payment of a 400 million euro poison pill.

Apparently, the UK government assumes that the EU is bluffing, when the EC President publicly claims that there will be no post-Brexit trade treaty:

“I trust the British government to implement the Withdrawal Agreement, an obligation under international law & prerequisite for any future partnership. Protocol on Ireland/Northern Ireland is essential to protect peace and stability on the island & integrity of the single market.” (Twitter)

 A quote from a picture: “Today’s Menu. Take It or Leave It. Complaints not accepted.”

Take It Or Leave It (1966) by The Searchers

artists, lyrics, video, Wiki-1, Wiki-2Wiki-3

Just take it or leave it 

Don’t tell your friends 

Just what you’re gonna do now 

You take it or you leave it, it’s just my life

Note: all markings (bolditalicunderlining) by LO unless stated otherwise.


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