2404002 Informal Interpretation

Sheinberg, Samuel I.
From: 	HSRHelp
Sent: 	Tuesday, April 16, 2024 10:43 AM
To: 	Walsh, Kathryn E.; Berg, Karen E.; Musick, Vesselina; Sheinberg, Samuel I.; Six, Anne;
Whitehead, Nora; Fetterman, Michelle; Burton, June; Larson, Peter
Subject: 	FW: Request for Informal Interpretation
From: Shaffer, Kristin <kshaffer@ftc.gov>
Sent: Tuesday, April 16, 2024 10:42:34 AM (UTC-05:00) Eastern Time (US & Canada)
To:
Cc: HSRHelp <HSRHelp@ftc.gov>
Subject: RE: Request for Informal Interpretation
Because Person A has the power to remove and replace the trustees of the two trusts, she has control of both trusts.
Additionally, the holdings of married couples and their minor children are all part of the same “person” for HSR
purposes. Therefore, the holdings of the two trusts must be aggregated, along with the holdings of Person A’s husband.
As a result, Person A and Person B are both the (singular) UPE of Corporate Parent and Acquired Entity.
Best regards,
Kristin
Kristin Shaffer
Attorney
Premerger Notification Office
Federal Trade Commission
202-326-2388 | kshaffer@ftc.gov
From:
Sent: Monday, April 15, 2024 2:47:53 PM (UTC-05:00) Eastern Time (US & Canada)
To: HSRHelp <HSRHelp@ftc.gov>
Subject: Request for Informal Interpretation
Dear PNO Staff:
This firm represents the Acquiring Entity in a transaction that will require HSR Premerger Notification. I write to request
interpretive guidance regarding the Ultimate Parent Entity or Entities of the Acquired Entity.
Factual Background
Acquiring Entity intends to acquire the outstanding voting securities of Acquired Entity, a corporation, through an equity
purchase agreement. Acquired Entity is a wholly-owned subsidiary of a Delaware corporation (“Corporate Parent”). The
voting securities of Corporate Parent are held by fifteen persons and two irrevocable trusts. None of the persons or
trusts individually hold 50% or more of Corporate Parent’s voting securities. Other than Corporate Parent’s bylaws
confirming that the shareholders have the power to designate the board of directors in proportion to their ownership
interests, which, again, do not exceed 50% individually, there is no separate contractual agreement that gives any of the
persons or trusts the contractual power to designate 50% or more of Corporate Parent’s board of directors and we
therefore assume that this portion of the corporate control test is inapplicable.
A single individual (“Person A”), however, is both the trustee for and beneficiary of the two irrevocable trusts. Together,
the two irrevocable trusts’ ownership interests in Corporate Parent exceed 70%. While Person A does not separately
hold an individual ownership interest in Corporate Parent, her husband (“Person B”) holds an additional approximately
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7% ownership i nterest . Person A has the power to name her successor trustee and to remove a corporate trustee for
both irrevocable trusts.
Questions
Question 1: Should the t w o irrevocable trust ow nership interests of Corporate Parent, wh ich exceed 50% in the
aggregate, be aggregated such that Corporate Parent is not the UPE of Acquired Entity?
Question 2: If the answ er to Question 1 is "yes," then is Person A's pow er to name her successor trustee and remove a
corporate trustee sufficient "control" over the t w o irrevocable trusts such that Person A is the (or a) UPE of the Acquired
Enti ty instead of the t w o irrevocable trusts?
Question 3: If the answ er to Question 2 is "yes," then should Person A's aggregated ow nership interest, through the two
irrevocable trusts, also be aggregated wi th the individual ownership interest of her husband, Person B, such that both
Person A and Person Bare the Acquired Entity's UPEs?
Thank you. If you need any addit ional facts or clarifications, please do not hesitate to contact me .
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