Question
From:
To: "AVillavicencio@ftc.gov")
Date: Fri, Jan 19, 2001 12:37 PM
Subject:Acquiring person
DearAlice.:
Thepeople in London are gone by now, but I believe that this is an accurate description of thetransaction. If there is any change on Monday, I will let you know but Ibelieve this to be completely accurate.
Broadlyspeaking, A, the existing holding company, will be succeeded by A1, at the sametime that A1 acquires assets in the US.
Obviously,A1 must file for the new acquisition of assets in the US. However, thequestion is what happens when A1 (the new holding company) acquires the assetsof A (the old holding company).
Forpurely technical reasons, it might appear that A1 should file as it acquires Aand A's assets in the US. However, from any substantive point of view, this isnothing more than an internal corporate matter which imposes a new holdingcompany on top of the existing corporate structure, with no change in controlor .equity ownership. For that reason, the only logical conclusion is that thisis a" pass-through" or "continuum." From any substantivepoint of view, the ultimate parent entity remains owned and controlled by eidentical people. For that reason, we don't believe that there should be anindependent filing for that part of the transaction.
FACTS
Theexisting holding company is A, which has worldwide assets including B, a US sub.
Thetransaction for which we are filing has two parts.
FIRSTPART
A1(which will be A's new holding company) has been created and will buy a US company (D) through aDelawaresubsidiary (C).
The Delaware sub C will bemerged into D and will not longer exist. (I believe this means that theacquiring person is technically B although the ultimate parent entity isobviously A1.) This is the part for which we were planning the filing.
SECONDPART
The assets of A are going to betransferred to A1. A will probably cease to exist.
At the time of the consummation, Ais effectively going to be merged into A1. All the stock of A is going to beexchanged for A1 stock on a share by share basis. Each share's economic andvoting rights are identical. The directors of A are going to become directorsof A1. A shares and ADRs and going to be withdrawn and their substitutes willbe A1 shares and ADRs. The bottom line, however, is that there is absolutely nochange of control. The new holding company will have the identical shareholdersand directors as the old company; no outside influence is being introduced; andthe result is identical to what in the US would be a share exchange. The only difference was due toBritish law, under which I understand that, there, a company does notincorporate as a wholly-owned sub its own successor.
Here, the successor company (whichI believe is incorporated in Luxembourg but registered in the UK) was formally incorporated by counsel, and currently hasno independent existence or assets whatsoever. Its sole purpose is to serve asa successor to the existing holding company. I believe that the transaction wasstructured like this for tax reasons.
Under these facts, the substanceof the transaction is the precise equivalent to a share exchange, a "passthrough" or "continuum". The sole difference is that, fortechnical reasons, A1 was incorporated separately rather than as a wholly-ownedsubsidiary of A. However, in terms of control, A and A1 are functionallyidentical.
For these reason, I want toconfirm with you that no separate filing would be required for part of thetransaction under which A merges into A1.