2410009 Informal Interpretation

Sheinberg, Samuel I.
From: 	HSRH elp
Sent: 	Tuesday, October 22, 2024 1:35 PM
To: 	Walsh, Kat hryn E.; Berg, Kare n E.; M us ick, Vesse li na; Shaffer, Kr istin; Sheinberg, Samue l I. ;
Six, Anne; Fetterman, Miche lle; Burton, June; Larson, Peter
Subject: 	FW: Size of Transaction Test
From: Wh itehead, Nora <n whitehead@ftc.gov>
Sent: Tuesday, October 22, 2024 1:34:54 PM (UTC-05:00) Eastern Time ( US & Canada )
To:
Cc: HSRHe lp < HSRHelp@ftc.gov>
Subject: RE: Size of Transacti on Test
We agree.
From: HSRHelp < HSRHe lp@ftc.gov>
Sent: Tuesda y, October 22 , 2024 9:47 AM
To: Walsh , Kathryn E. <kwalsh@ftc.gov>; Berg, Karen E. <KBERG@ftc.gov>; Musick, Vesse li na <vmusick@ftc.gov>;
Shaffer, Kr istin <kshaffer@ftc.gov >; She inberg, Samuel I. <SSHEINBERG@ftc .gov>; Six, Anne <as ix@ftc.gov>; Whitehead,
Nora <nwhitehead@ftc.gov >; Fetterman, Michelle <mfetterman@ftc.gov>; Burton, June <jburton@ftc.gov>; Larson,
Peter <plarson@ftc.gov>
Subject: FW: Size of Transaction Test
From:
Sent: Tuesday, October 22, 2024 9:46:40 AM (UTC-05:00) Eastern Time ( US & Canada )
To: HSRHelp < HSRHe lp@ftc.gov>
Subject: Size of Transaction Test
Hi fol ks.
We are writing to confirm the size of transaction test would not be satisfied under the facts be low .
X will acquire from Yi n an asset acquisition a building (the " Bu ilding") currently used by Y for warehousing, shipping,
receivi ng, distri but ion, and light assembly purposes. The purchase pr i ce is less than $119.5 million . X will not assume an y
liabil it i es related to the Bu ildi ng ( other than possibly stepping into Y's shoes with respect to future performance under
existing contracts). In addit ion, there is noth ing that X needs to aggregate with the value of the Bu ilding under the HSR
aggregation ru les.
X will lease the buildi ng back to Y at the closi ng (the "Lease-Back ") . The temporal term of the lease will be 11 years. Y wil l
ha ve the option to renew the lease for two periods, fi ve years each . Ne ither the init ial term of the lease nor the possibly
additional 10-year extensions would exhaust the useful life of the Buildi ng . The terms of the lease are arms-length and
reflect market rates for rent. There is no opt ion in the lease for Y to acquire the Bu ilding back from X. The lease may be a
tr iple net l ease.
Because the terms of the lease-back are arms-length, we do not believe that we need to take them i nto account when
asses si ng whether the $119.5 million HSR si ze of transaction test wou ld be satisfied when X acquires the Bu ilding from Y.
Because X would pay Y l ess than $119.5 mi ll ion for the Bu ilding, and so long as X concludes under the HSR ru les that the
current fair market value of the Bu ilding is al so l ess than $119.5 million, we understand that the transaction is not HSR
reportable. Do you agree?
Thanks for y our help.
Best regards,
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