Question
May 13, 2005
VIA FACSIMILE (202) 326-2624 ANDU.S. MAIL
Premerger NotificationOffice
Bureau of Competition, Room 303
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Washington, DC 20580
Attn: Ms. Nancy M. Ovuka
Re: Acquisition of Shares of Company A
Dear Ms. Ovuka:
As per ourconversation earlier today, I am writing to you to confirm your conversationearlier this month with my colleague, (redacted), with regard to thedetermination that the following described transactions would be exempt fromthe Hart-Scott-Rodino Premerger Notification requirements set forth in the HartScott Rodino Antitrust Improvements Act of 1976 (the "Act") pursuantto the newly revised 16 C.F.R. 802 et. seq., and specifically under Section802.4 and Section 802.50 of Title 16 of the Code of Federal Regulations (the"CFR"):
Proposed Transaction 1:
Company A, aDelaware corporation, is acquiring substantiallyall of the voting securities of Company B (and potentially a second entity,Company B1), from Company C and Company D (the shareholders of Companies B andB1)1. Since this transaction is an acquisition of voting securitiesof foreign issuers which do not hold assets located in the United States or have sales in or into the United States over $53.1MM, it is exempt under Section802.51 of the CFR.
Proposed Transaction 2:
As part of the consideration for theabove described transaction, Company A will issue to Company C and Company D,shares of Company A's common stock representing approximately 20% of theoutstanding shares of Company A on the date of the acquisition. AlthoughCompany A is a United States entity, it is a holding company whichdoes not do business in the United States. Company A hasnumerous subsidiaries, all of which are incorporated and do business outside ofthe United States, and Company A, through its subsidiaries, derives all of itsrevenues in one European country. Other than its interests in theaforementioned foreign subsidiaries, Company A has minimal assets in the UnitedStates (the total of which do not exceed the $53.1 Million threshold).
Exemptions:
Weare relying on Sections 802.4 and 802.50(a) of the CFR as exempting the second proposed transaction from thenotification requirements of the Act. Section 802.4, as recently revised,exempts from the notification requirements, the following:
"an acquisition of voting securities of an issuer ...whoseassets together with those of all entities it controls consist or will consistof assets whose acquisition is exempt from the requirements of the Act pursuantto Section 7A(c) of the Act, this part 802, or pursuant to 801.21of this chapter, is exempt from the reporting requirements if the acquiredissuer ...and all entities it controls do not hold non-exempt assets with anaggregate fair market value of more than $50 million (as adjusted) ...(emphasisadded).
Additionally, the relevant part of Section 802.50(a) of the CFR exempts the following:
"The acquisition of assets located outside the United Statesshall be exempt from the requirements of the act unless the foreign assets theacquiring person would hold as a result of the acquisition generated sales inor into the U.S. exceeding $50 million (as adjusted) during the acquiredperson's most recent fiscal year."
In combination, since the assets of Company A consist primarily of securitiesof its subsidiaries, each of which are foreign entities and none of which holdassets in the United States, and since the acquired assets did not generate anysales in or into the United States in Company A's most recent fiscal year,Rules 802.4 and 802.50 would exempt the transaction from reporting under theAct.
Based on ourconversation and your conversations with Mr. Walter, we understand that giventhe above set of facts, Company A will not be required to submit aHart-Scott-Rodino Premerger Notification filing to the Federal Trade Commissionor the Department of Justice for the transactions outlined above. Pleasecontact us immediately if our understanding of the reporting requirements withrespect to this transaction is incorrect.
Footnote
1 Note thatCompanies B, B1, C and D are all European entities. Neither Company B norCompany B1 had, individually or in the aggregate, assets in or sales in or intothe United States of over $53.1MM in such company's mostrecent fiscal year.