Question
From: (redacted)
Sent: Monday, February 07, 2005 4:17 PM
To: Verne,B. Michael
Cc: (redacted)
Subject: acquiring voting securities of a sub after clearance with respect toparent
Thanks for speaking with us this morning.
Again, our facts are as follows:
1. Our client has already filed an HSR at the$500 million threshold for buying the voting securities of the acquired personof which P is the ultimate parent entity. The waiting period has expired sothat our client is free to buy up to one share less than 25/a of P.Although item 3(c) of our clients HSR formdescribes a purchase of voting securities of the issuer P, in our view the formcovers the entire acquired person of which P is the ultimate parent entity andin particular covers S, a 55% sub of P (the 45l0 of S not held by P tradespublicly). After all, S's revenues were included in the consolidated revenuesthe acquired person reported in its filing.
2. Our client is now interested in possibly acquiring more than $50 million ofvoting securities of S. Example 2 of the attached interpretation that we foundon the FTC website seems to be on point and would seem to allow our client tobuy voting securities of S since we are clear to buy up to one share less than25% of the acquired person of which S is a part.
We think that the way to run the math in applying the 25% threshold is to saywe need to file before crossing the point where the combined percentageownership interests in P and S hits 25% (or 50% if the value of the securitiesis less than $1 billion). For example, if our client owns 4.9% of P it would beable to buy another 20% of S (or 45% if the value is less than $1 billion)before triggering another filing. This makes sense to us because S and P are,for HSR purposes, synonymous given that Pcontrols S (and for that reason a 4.9% interest in P is the same for HSR purposes as a 4.9% interest in S so that our client would onlyhave room for another 20% or 45% of S).