2202003 Informal Interpretation

Date

February 2, 2022

Rule

7A(c)(10)

Staff

Kristin Shaffer

Response/Comments

Assuming that the SPAC only holds cash, we agree.

Original Image - 2202003 Informal Interpretation (271.02 KB)

Question

From: Shaffer, Kristin <kshaffer@ftc.gov>
Sent: Wednesday, February 2, 2022 12:26:51 PM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Cc: HSRHelp <HSRHelp@ftc.gov>
Subject: RE: Question about Section 7A(c)(10)

[Redacted]
Assuming that the SPAC only holds cash, we agree.

Best regards,

Kristin

From: [Redacted]
Sent: Wednesday, February 2, 2022 10:09 AM
To: HSRHelp <HSRHelp@ftc.gov>
Subject: Question about Section 7A(c)(10)

I am writing to ask whether the following acquisition is exempt under Section 7A(c)(10) of the HSR Act. Corporation A currently holds 80% of the voting securities of Corporation B. Under a merger agreement, Corporation B will be acquired by a SPAC whose sole holdings after the merger will be 100% of the voting securities of Corporation B, worth approximately $500 million. In return for the voting securities it holds in Corporation B, Corporation A will receive up to (but no more than) 80% of the voting securities of the SPAC, worth approximately $400 million. While the SPAC’s acquisition of Corporation B through the merger will be reportable, under Section 7A(c)(10), it appears that Corporation A’s acquisition of up to 80% of the SPAC is exempt because it’s ownership interest in Corporation B will not increase as a result of that acquisition. See Informal Interpretation 0501012 (acquisition by existing target shareholders of voting shares of Newco formed to acquire 100% of target’s voting securities exempt so long as shareholders receive the same or a lower percentage of Newco voting securities as they held in target, and Newco has no holdings after merger other than target’s voting securities). Please let me know as soon as possible if you agree. Thanks.

She inberg, Samuel I.
From: 	HSRHelp
Sent: 	Wednesday, February 2, 2022 12:27 PM
T o: 	Walsh, Ka t hryn E.; Berg, Ka ren E. ; Musick, Vessel ina; Sheinberg, Samuel I. ; Six, Anne; Wh itehead, Nora
S ubj ect: 	FW: Question about Section 7A(c )( 10)
From: Shaffer, Kr istin <kshaffe r@ ftc.gov>
Se nt : Wednesday, Fe bruary 2, 2022 12:26:51 PM (UTC-05 :00) Ea stern Time (US & Ca nada)
To:
Cc: 	e p < 	e p 	c.gov>
Subj ect : RE: Question about Section 7A(c)( 10)
-Assum ing that the SP AC on ly ho lds cash, we agree.
Best regard s,
Kr istin
Kri st in Sh affer
Attorney
Pr emerger Notificat ion Office
Federal Trade Commission
202-32 -
From:
Se nt : W ednesda y, February 2, 2022 10:09 AM
To: HSRHelp <HSRHe lp@ftc.gov>
Subject : Questi on about Section 7A(c)( 10 )
I am w rit ing to as k w het her the follo w ing acquisition is exempt under Section 7A (c)( 10) of the HSR Act.
Corporation A curren tly holds 80 % of the vot ing securities of Co rporation B. Under a merger agreemen t,
Corporation B will be acqu ired by a SPAC whose so le holdings after the merger will be 100 % of the voting
securities of Corporation B, w ort h approximately $500 mill ion . In return for the vot ing secur it ies it holds in
Corporation B, Corporation A will rece ive up to (but no mo re t han ) 80 % of the voting securities of the
SPAC , worth approximately $40 0 mi ll ion . While the SPAC 's acquisition of Co rporation B thro ugh the
merger will be reportable, under Sect ion 7A(c)( 10 ), it appears that Co rporation A's acq uisition of up to 80%
of the SPAC is exempt because it' s ownership inte rest in Corporation B w ill not inc rease as a result of that
acqu isi tion . See Informal In terpretatio n 0501012 (acqu isition by ex isting ta rget share holders of voting
shares of New co f ormed to acqu ire 100% of target's vot ing securiti es exempt so long as shareholders
rece ive the same or a lower percentage of New co voting securities as t hey he ld in t arget, and Newco has
no ho ldings after merger other than target's voting securities ). Please let me know as soon as possible if
you ag ree . Thanks.
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2202003 Informal Interpretation

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