Question
December 23, 2003
VIAFACSIMILE (202-326-2624) AND EMAIL
Michael Verne, Esquire
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th Street and Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Re: Confirmation ofRecent Advice Regarding Rule 801.13(b)
Dear Mr. Verne:
Thisletter confirms our telephone conversation of Friday, December 19, 2003,regarding the filing requirements of the Hart-Scott-Rodino AntitrustImprovements Act of 1976, as amended, 15 U.S.C. 18a (the "HSRAct" or the "Act"), and the rules promulgated thereunder, 16C.F.R 801.10 et seq. (the "Rules"), as the same relateto two asset acquisitions occurring between the same parties.
Tosummarize and as discussed, Bank A proposes to acquire substantially all of theVISA* credit card loan portfolio of Bank B for a purchase price ofapproximately $50 million (the "Transactions"). For a variety ofbusiness reasons, the parties anticipate consummating the Transactions in twoseparate closings, one to be held as soon as possible in December 2003 coveringapproximately $20 million in loan assets (the "First Closing"), and asecond closing scheduled to occur in January 2004 for the remaining $30 millionof loan assets (the "Second Closing'. Each of the First and SecondClosings will occur under the terms of separate purchase agreements executedbetween the parties at the same time prior to the First Closing (the"Purchase Agreements").
For thepurposes of this inquiry, assume that, when considered together, theTransactions meet both the Act's Sire-of-the-Persons and theSize-of-the-Transaction jurisdictional thresholds. Also and as discussed,assume that independent legitimate business reasons exist for structuring theTransactions in two closings and that this dual closing structure is not anartifice to avoid a filing under the Act. Similarly, assume that the decisionto use separate Purchase Agreements to cover each closing was also reached forindependent legitimate business reasons.
Asdiscussed, the question I posed is whether a filing under the Act is requiredin connection with the First Closing. Stated differently, will the FirstClosing and the Second Closing be required to be aggregated so as to require afiling under the Act prior to consummating the First Closing? The language ofRule 801.13(b) governs aggregation for asset acquisitions and appears onits face to require aggregation only in certain instances where the firstacquisition was consummated within 180 days before the signing of theletter of intent or purchase agreement for the second acquisition. Rule 801.13(b)(2). Nevertheless, I understand that it has been the policy of the PNOfor some time to aggregate seriatim asset acquisitions in certain instances notexpressly required by Rule 801.13(b). Specifically, if the acquisitionsoccur pursuant to a single purchase agreement, the PNO generally has requiredaggregation, the language of Rule 801.13(b)(2) notwithstanding. See,e.g. 5.04[6J[c](2] AXINN, FOGG, STOLL & PRAGER (Rev.Ed. 2002); ABA Premerger Notification Practice Manual (3rd Ed. 2003),Interpretation No. 254. At the same time, if the acquisitions occur pursuant toseparate purchase agreements, aggregation is generally not required, unless theavoidance provisions of Rule 801.90 are at play. See, ABA PremergerNotification Practice Manual (3 ` Ed. 2003), Interpretation Nos. 150, 154and 254.
In ourdiscussion, you stated that since the acquisitions were to occur pursuant toseparate purchase agreements and assuming that Rule 801.90 avoidanceconsiderations were not at issue, the parties could consummate the FirstClosing without making a filing under the Act. However, and as discussed, theparties will file under the Act prior to consummating the Second Closing if,considering the two Transactions together, the Act's jurisdictional thresholdsare met and no exemption is available. At the time of making anysuch required filing, the parties' filings would cover both the First Closingand the Second Closing and the prior acquisition would be noted therein.
Pleasereview this letter and call to let me know as soon as possible if I havemisunderstood our conversation. I look forward to hearing from you at yourearliest convenience, as the parties anticipate consummating the First Closingprior to December 31, 2003. I can be reached at (redacted). Thank you in advance foryour time and consideration in this matter.