Question
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June 26, 2000
BY FACSIMILE - (202) 326-3624
Ms. Alice Villavicencio
Federal Trade Commission
Premerger Notification Office
Room 303
Washington, D.C. 20580
Dear Alice:
As we discussed yesterday, I would appreciate your advice regarding the reportability of the following transaction.
Statement of Facts
Assume that the size-of-person test is met.
A currently holds in excess of $15 million /15% of the outstanding voting securities of B. B currently owns a controlling interest in B1. B1 intends to sell between $20 and $25 million of its voting securities. It is contemplated that in a reportable transaction, C, which currently owns less than $15 million of the outstanding voting securities of B, will concurrently acquire an additional $10 million of voting securities of B and $15 million of voting securities of B1. (Note #1) As a result of C's acquisition of voting securities of B1, C will be entitled to elect a majority of the directors of B1 and, therefore, will be deemed to control B1. In a simultaneous closing, A will acquire $5 million of voting securities of B1. A will be entitled to designate one director of B1 out of a total of seven directors, but will not have a controlling interest in B1. As a result of these transactions, B will no longer own a controlling interest in B1.
ISSUE
The question is whether A, because of his current ownership interest in B, has a filing requirement with respect to his acquisition of voting securities of B1. If B were to continue to control B1 after the transaction, I believe that 801.14(a) would require that A's holdings in B be aggregated with the stock to be acquired in B1. I am not sure that this result applies if B will no longer control B1 after the transaction.
I appreciate your assistance in this matter.
Very truly yours,
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