0602010 Informal Interpretation

us-ftc-hsr-informal-interpretations-291b12c79f86fe59ed8170f15e684e0c0602010 Informal InterpretationGuidance

Date
Rule
801.13, 801.4
Staff
Michael Verne
Response/Comments
1) Yes. 2) No But if their underlying assets do not have sufficient nexus with the US, their fair market value would not count. 3) If they are not controlled by target, they are separate transactions.

Question

From: (redacted)

Sent: Wednesday, February 08, 2006 12:09 PM

To: Verne, B. Michael

Subject:Acquisition of US Person by Foreign Person

Mike, I have not had theopportunity to correspond with you yet this year, and will not be able to makethe Spring Meeting, so allow me to wish you a happy new year!

We have a stock transactionthat is just getting started, and I wanted to run some questions by you:

A European family-ownedcompany (assume it is a foreign person) is acquiring the shares of a USfamily-owned company (Target). The Target is owned equally by three familymembers who will each sell their shares as part of the same transaction to thebuyer. Consequently, the buyer will end up with 100% of the shares of theTarget. The total purchase price is $70 million (each family member wouldreceive 1/3rd.

1. Am I correct that this isstill treated as one transaction for purposes of determining the size oftransaction test?

2. The Target hassubsidiaries outside the US which will be acquired as part of the transaction(because they are subsidiaries). If you deduct the value of these subsidiariesfrom the purchase price, we could be around the $56 million level. The questionis: in a share deal should I deduct the value of the foreign entities being(indirectly) acquired?

3. Apparently the threefamily members selling the Target also have some companies which they holdpersonally (mostly real estate) outside the Target. The idea is to purchasethese entities too. I assume that these are not separate transactions forpurposes of the HSR, but wanted to get your thoughts on that as well.

If you need more informationto answer these questions, just let me know. Kind regards,


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