2501002 Informal Interpretation

Sheinberg, Samuel I.
From: 	HS RHe lp
Sent: 	Mon day, Ja nuary 13, 2025 4:28 PM
To: 	HS R Auto Forward List
Subject: 	FW : HS R size-of-transaction inquiry
From: Shaffe r, Kristin
Sent: Monday, January 13, 2025 4: 28 :16 PM (UTC- 05 :00) Eastern Time (US & Ca nada)
To:
Cc: HSRHe lp
Subject: RE: HSR size-of-transaction inquiry
Th ank you f or your pat ience. Based upon t he info rmat ion provided, we agree wit h your fi rst t wo bulle ts .
-For bullet t hr ee, we ag ree t hat a fai r market va luat ion should be done but it should take int o account t he
business reality that t hose shares are t i ed to t he units of t he LL C.
Best r ega rd s,
Kri stin
Kristin Shaffer
Att o rn ey
Premerger Notification Office
Federal Trade Commission
202-326-2388 I kshaffer@ftc.gov
From:
Sent: Monday, January 1 3, 2025 12:25 PM
To: HSRH elp
Subject: RE : HSR size-of-transaction inquiry
Hi HSR Help. I know t hat you all have been very b usy and there was an i nte rvening ho liday, but j ust checking back
on the PNO's thoughts on my inquiry below. Thanks,
From:
Sent: Wed nesday, January 8, 2025 10:31 AM
To: 'HSRH elp'
Subject: HSR size-of-tra nsaction inquiry
Dea r HSR Help: Please let me know if you agree wi t h t he following size-of-transaction analysis fo r an acqu iring
person w ith different equ ity interests in an " U p-C" co rporate structure.
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Publicly traded "Up-C" corporat ion (P ubCo} holds more t han 50% OpCo LP (t he "Partner sh ip") equity. PubCo
equity consists of Class A Common Stock (publicly t raded} and Class B Common Stock (5x vote, not traded, no
economic interest beyond pa r value of $0.10). Eac h holder of Class B Common Stock also holds one Partnersh ip
Class B Unit (Class B Unit} tor each Class B Common Stock share held.
Pursuant to Exc hange Agreements among the PubCo, Partnership, and the Class B Common Stock/Class B Un it
holders, each Class B Unit ho lder h as the right to surrender a Class B Un it to the Partnership, together with t he
su rrender of one share of Class B Common Stock to PubCo, in exchange tor the issuance of one fully paid and
nonassessable share of Class A Commo n Stock and the par value of the Class B Commo n Stock. The Class B
Common Stock and Class B Units must be exchanged or conveyed (to certain a ll owed t ransferees} together.
An off icer of PubCo will receive Class A Commo n Stock th rough vesting of RSUs. The issue is h ow to value his
holdings tor size-of-transaction purposes.
• 	Class A Commo n Stock is valued at the market pr ice or t he acqu isition pr ice, wh ichever is greater.
• 	Class B Units held by the officer comprise a minority position in an LL C. As such, the value of the Class B
Units is not aggregated with the value of the Class A Common Stock and Class B Common Stock. See
Seen ari o 3, https ://www.ftc.gov/ entorcem ent/premerger-notification-progra m/hsr-resou rces/when
aggregate-u nder-hsr-act. Although the Class B Un its may be considered convertible vot ing securities, their
va l ue is not aggregated per 801.15/802.31.
• 	The value of the Class B Common Stock is the fair ma rket value of such shares alone and independent of
the va l ue of the corresponding number of Class 6 Units held by the j nd jyjduaL even though they must be
conveyed or exchanged together by virtue of the Exchange Agreements, because they are tec hnically
separate interests in different entities.
Please let me know if you agree with the foregoing analysis or h ave any addition al questions.
Thank you,
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