Question
January 13, 2003
Alice M. Villavicencio
Premerger Notification Office
Federal Trade Commission
Room 303
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
Dear Ms. Villavicencio:
I am writing to confirm the substance of our phone conversation oflast Wednesday January 8, 2003, regardingthe fact pattern described below.
Our client "B" filed an HSR Notification and Report latelast year, as the acquired person in a transaction contemplating the sale to"A" (for approximately $90 million in consideration) of 100% of thevoting securities of seven issuers (Issuer 1 through Issuer 7) of which "B"is the UPE. As I mentioned to you, "A" will be closing on thepurchase of 100% of the voting securities of Issuer 1 through Issuer 6 (forapproximately $70 million in consideration) within one year of the lapse of thewaiting period. The purchase of 100% of the voting securities of Issuer 7 (forapproximately $20 million in consideration) is set to close approximately 1.5years following the lapse of the waiting period but definitely within fiveyears from the lapse of the waiting period.
The two issues that concerned me are (i) whether a new HSRNotification and Report is required prior to the consummation of the purchaseof 100% of the voting securities of Issuer 7 (for approximately $20 million inconsideration), and (ii) whether an amended HSR Notification and Report isrequired to be filed for the purchase of 100% of the voting securities ofIssuer 1 through Issuer 6.
New HSR Notification and Report
I had initially approached the acquisition from "B" of100% of the voting securities of Issuer 7 by "A", for approximately$20 million, following the expiration of the one year statutory period,"A" as being interpreted as "A" holding an aggregate totalamount of the voting securities of "B" in excess of $50,000,000(having previously acquired $70 million in the acquisition of the votingsecurities of Issuers 1 through 6). The 50% Section 18a c(3) exemption wouldnot apply as prior to the acquisition of the voting securities of Issuer 7 by"A," "A" owned 0% of the voting securities of such issuer.I therefore was looking to 802.21 for guidance. In our discussion youinterpreted the acquisition of the voting securities of Issuer 7 by"A", for approximately $20 million, in and of itself, as not beingreportable because following the consummation, "A" would not hold anaggregate total amount of the voting securities of "B" in excess of$50,000,000 (the voting securities of Issuers 1 through 6 now being votingsecurities of "A") and would only hold the $20 million of votingsecurities being acquired.
We also discussed 802.21 and the requirement that, in addition tohaving the same UPEs and not exceeding the next higher notification thresholdin the earlier acquisition, notification be filed "with respect to anearlier acquisition of voting securities of the same issuer." While"B" filed notification for 100% of the voting securities of Issuer 7,none of the voting securities of Issuer 7 will be acquired within the one yearfollowing lapse of the waiting period. My concern arose from a strict readingof the language of 802.21 that seems to imply that an earlier acquisition ofvoting securities of the same issuer needs to have taken place.
As we discussed, since your position is that the acquisition of100% of the voting securities of Issuer 7 by "A" from "B"for approximately $20 million in consideration would not be reportable byitself, because following the acquisition "A" would not hold anaggregate total amount of the voting securities of "B" in excess of$50,000,000, there would be no additional reporting requirement, as the$50,000,000 threshold is not met and therefore 802.21 is irrelevant.
Amendment of Original HSR Notification and Red
Per our discussion, you have confirmed that no amendment of theoriginal HSR Notification and Report is required as the transaction that willbe closing within a year of the lapse of the waiting period is materially thesame as reported and the change in excluding Issuer 7 from such closing wouldnot change the form of the transaction.
If I have misinterpreted our conversation and your recommendations,please call or write me. Thank you very much for your assistance and guidancein this matter.