0905012 Informal Interpretation

us-ftc-hsr-informal-interpretations-b4d884a23b52482c20e835c5af23fb4b0905012 Informal InterpretationGuidance

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Date
Rule
801.2, 802.4, 15 USC 18a(c)(10) 7A(c)(10)
Staff
Michael Verne
Response/Comments
05/20/2009 1. Agree 2 (a) Agree (b) No - the value of the Company shares is not affected by exempt assets that it holds. I assume you are trying to apply the 802.4/802.30( c) concept here. That is -any B assets held by Company are exempt with respect to the acquisition of Company shares by B shareholders. This doesn't work because 1) the shareholders other than A do not control B, so they didn't hold its assets pre-acquisition and b) this is not a formation. 3 (a) I assume Company and C are the same entity? Yes the C shareholders can rely on 7 A(c)( 10) (b) Moot - but see 2 (b) above I've also attached a link to a tip sheet that shows the relationship between the application of 802.4 and the size-of-transaction. http://www.ftc.gov/bc/hsr/802_4tipsheet.shtm K Walsh concurs.

Question

From: (redacted)
Sent: Tuesday, May 19, 2009 4:56 PM
To: Verne, B. Michael

Subject: Structure of Transaction question

Dear Mike hope all is well with you I have a question about how to report a transaction.

Facts:

1. A is the UPE of B.

2. B will merge with and into Company with Company remaining as the surviving corporation.

3. B shareholders will receive 100% of the newly-issued Company shares of Class B Common Stock representing 72% of Company's outstanding voting securities.

4. Pre-closing Company shareholders will receive 100% of the newly-issued Company shares of Class A Common Stock representing 28% of Company's outstanding voting securities.

5. Post-closing A will hold 50% or more of Company's voting securities.

Questions:

1. A will submit an HSR filing in connection with its acquisition of 50% or more of Company voting securities.

2. To the extent any other B shareholder will receive Company voting securities with an aggregate value of $65.2 million would that shareholder

a. Be required to submit a separate HSR filing unless otherwise exempt?

b. If that shareholder needs to file an HSR would 802.4 apply and the value of the Company shares only include non-exempt assets (Company assets)?

3. The C shareholders will exchange their Company shares for newly-issued shares of C voting securities

a. Can those shareholders rely on 7A(c)(10) because their aggregate percentage interest will be reduced even though the shares now include the assets of B?

b. If C shareholders need to file HSR would they use 802.4 and value of the C shares only include non-exempt assets (B assets)?

4. If none of the above are correct how should it be treated?

Many thanks as always for your guidance. 



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