AbstractThis paper presents a case study of negotiations over the combination of a small manufacturing firm into a multi‐billion dollar conglomerate following its 'white knight' acquisition. It focuses on the strategic and tactical conflicts between the two firms and traces these to the party's emotional reactions to the combination. Feeling of loss versus gain in the two firms, each party's sense of uncertainty and threat, and their moves toward proactive versus reactive control in the combination are analysed to identify the roots of strategic conflict. These feelings, plus incompatibilities in the two company's managements, business systems, corporate cultures, and goals for combination ramify in conflict in the negotiations themselves. The paper concludes with a more generic model illustrating contextual features of combinations that shape human reactions and conflicts in negotiations after the sal