Question
October 29, 2003
MichaelB. Verne, Esq.
Federal Trade Commission
Premerger Notification Office
Bureau of Competition
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
Re: TelephoneConversations on October 23 & 24. 2003
DearMichael:
This letter serves to confirm our telephone conversationsof Thursday, October 23, 2003, and Friday, October 24, 2003. Pursuant to these conversations, weagreed that under the factual scenario described below, there would be noreporting obligation under the Hart-Scott-Rodino Antitrust Improvements Act of1976 (the "Hart-Scott-Rodino Act"), 15 U.S.C. 18a. Inparticular, we agreed that such a transaction would qualify for an exemption pursuantto 802.5 of the HSR Rules, 16 C.F.R.802.5 (notwithstanding that thesize-of-persons and size-of-transaction tests are met).
The factswe discussed are as follows:
Company Aowns a number of facilities and leases those facilities to Company B, Thesefacilities include real estate, buildings, and improvements, and are used by Bin a service industry. B intends to exit the business it conducts at several ofthese facilities. B understands that A is unwilling to consent to B's subleasingthe facilities (or consent to an assignment by B of the lease of the facilities)to third parties. Thus, in order to exit the business, B must purchase thefacilities from A, which will enable B to soil them on to third parties. WhileB playas to sell the facilities to several third parties, B will not be in aposition to close these divestitures simultaneously with the closing of B'sacquisition of the facilities from A. Thus, B will own and operate thefacilities for a period that is expected to vary by purchaser (from severalweeks to over six months). Company B has already signed letters of intent tosell two of the facilities, and expects to sign another prior to closing on itsacquisition of the facilities. (However, B does not expect that letters ofintent will be signed in relation to all of the divestitures of the facilitiesbefore the closing of B's acquisition of the facilities from A.) B's purpose inpurchasing the facilities is solely to facilitate the disposition of thefacilities. For accounting purposes, Company B will reflect the facilities onits balance sheet as assets "held for sale."
Based onour call, I understand that you agree with our view that the acquisition by B(from A) is exempt under 802.5 of the HSR Rules, as B would hold theacquired assets "solely for rental or investment purposes."
I wouldgreatly appreciate if you could call me at (redacted)to confirm that this letter accurately summarizes our conversation and yourviews on s e. Thank you for your attention to this matter.