Rule(s):	801.10
Staff:	Michael Verne
Response / Comments:	08/29/2012 – Do not include debt in acquisition price.
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From:        (Redacted)
Sent:         Monday, August 20, 2012 6:05 PM
To:             Verne, B. Michael

Subject:   Quick HSR question re role of assumed debt in acquisitions of voting securities

Dear Mike,

I hope your summer is going well, and I have what I think is probably a familiar HSR question for you.

We represent a buyer who will be buying 100% of the voting securities of a corporation, which we'll call Target, Inc. The purchase price for the securities of Target, Inc., falls below the HSR filing threshold. Buyer will also be assuming debt on which Target, Inc., is one of two obligors. Buyer will assume a pro rata share of the debt and discharge the debt after the closing. If the assumed debt is added to the acquisition price of the voting securities, then Buyer's total payments would exceed the HSR filing threshold, but if the valuation analysis extends to the voting securities alone then the transaction would fall below the filing threshold.

The Axinn treatise suggests that assumed debt should not be included in determining valuation in an acquisition of voting securities, and therefore the above transaction would be non-reportable. My understanding is that the treatise accurately describes the approach followed by the PNO with respect to acquisitions of voting securities. However, to be certain I wanted to ask you to confirm my conclusion of non-reportability under the facts provided above.