Question
From: [redacted]
To: ("mverne@ftc.gov")
Date: 3/15/02
Subject: HSR Exemption Inquiry
Mr. Verne,
Thank you for the prompt consideration and response to my inquiry by phone. Pursuant to your request, the structure and banking agencies involved in the acquisition transaction we are negotiating are summarized below. The transaction would be a single transaction with multiple steps occurring as part of its closing. The transaction will exceed the threshold value of $50 million under the Hart-Scott-Rodino Act (HSR Act).
1. Merger 1 - A savings and loan holding company will acquire the holding company parent of an industrial loan company by merger.
2. Merger 2 - The industrial loan company will then be merged into the savings bank subsidiary of the savings and loan holding company with the savings bank as the resulting institution.
3. The acquired holding company, which has no other activities or subsidiaries other than the industrial loan company, will then be dissolved. The industrial loan company is an FDIC-insured depository institution and is defined as a "state bank" in Section 3(a)(2) of the Federal Deposit Insurance Act (FDI Act) (12 USC 1813(a)(2)). As we discussed, by contrast, an industrial loan company is excluded from the definition of "bank" in Section 2(c)(2)(H) of the Bank Holding Company Act.
Merger 2, the merger of an industrial loan company into a savings bank, with the savings bank as the resulting institution, is subject to prior agency approval under the Bank Merger Act by the Office of Thrift Supervision (OTS) as provided in FDI Act Section 18(c)(2)(D) (12 USC 1828(c)(2)(D)). The OTS has advised us that Merger 1 need not be submitted to the OTS because Merger 2 is subject to its review and approval, as noted above.
As you know, Section 7A(c)(7) of the HSR Act exempts from the preacquisition notification and waiting period requirements transactions which require prior agency approval under Section 18(c) of the FDI Act. We seek your confirmation that no notification will be required for the proposed transaction because it is subject to agency approval by the OTS and notwithstanding that Merger 1 will not be subject to an advance antitrust review.
Thank you for your assistance and guidance.