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Date
Rule
801.2
Staff
Michael Verne
Response/Comments
Agree that the issuance of an issuers own stock to a controlled subsidiary in which case the issuer would indirectly hold its own stock does not constitute an acquisition by the issuer. N. Ovuka concurs. B. Michael Verne 7/19/02

Question

From:(Redacted)

To:Mike Verne

Date:7/18/02 12:42PM

Subject:Hypothetical

Here's the hypothetical that we were talking about yesterday afternoon by phone.

Corporation A holds 98% of the stock of Corporation B. Corporation B holds 90% of the membership interests in LLC. The other 10% is held by employees of Corporation A. LLC holds the remaining 2% interest in Corporation B.

Corporation B is merged up into its parent, Corporation A. The 98% stock interest in Corporation B that is held by Corporation A is simply cancelled as a result of the merger. In exchange for the 2% interest in Corporation B held by LLC, Corporation A will issue to LLC new common stock valued in excess of $50 million.

We were considering whether we could say that issuance of common stock to a 90% controlled subsidiary of the issuer might not be an "acquisition" for HSR Act purposes, even though the intra-person exemption would not technically apply.

Any thoughts?

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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