0207009 Informal Interpretation

us-ftc-hsr-informal-interpretations-308aa1b8cc10eafd5f6d58d4a47509fb0207009 Informal InterpretationGuidance

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Date
Rule
801.2
Staff
Michael Verne
Response/Comments
Agree that the issuance of an issuers own stock to a controlled subsidiary in which case the issuer would indirectly hold its own stock does not constitute an acquisition by the issuer. N. Ovuka concurs. B. Michael Verne 7/19/02

Question

From:(Redacted)

To:Mike Verne

Date:7/18/02 12:42PM

Subject:Hypothetical

Here's the hypothetical that we were talking about yesterday afternoon by phone.

Corporation A holds 98% of the stock of Corporation B. Corporation B holds 90% of the membership interests in LLC. The other 10% is held by employees of Corporation A. LLC holds the remaining 2% interest in Corporation B.

Corporation B is merged up into its parent, Corporation A. The 98% stock interest in Corporation B that is held by Corporation A is simply cancelled as a result of the merger. In exchange for the 2% interest in Corporation B held by LLC, Corporation A will issue to LLC new common stock valued in excess of $50 million.

We were considering whether we could say that issuance of common stock to a 90% controlled subsidiary of the issuer might not be an "acquisition" for HSR Act purposes, even though the intra-person exemption would not technically apply.

Any thoughts? 

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