Question
Ms. Nancy 0vuka
Premerger NotificationOffice
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
Re:Hart-Scott-Rodino Act Filing Requirements
Dear Ms. Ovuka:
Thisletter will confirm our conversation this morning with you, (redacted) and myself.In that conversation we presented to you the following factual scenario:
1. Several months ago, the Buyer and Seller("the parties") entered into a Letter of Intent ("LOI") forthe purchase of certain assets constituting an "Operating Unit " Theconsideration described in the LOI was a specific amount of cash in excess of$53.1 million plus certain "commitments" by Buyer, includingagreements to lease and purchase certain equipment that was not part of theOperating Unit ("Equipment"). There was no separate dollar amountstated as a purchase price for that Equipment to be purchased.
2, The parties submit that the purchase of theEquipment, if analyzed separately from the purchase of the Operating Unit,would not be reportable because it would fall within the 802.1 exemption foracquisitions of goods in the ordinary course of business, specifically 802.1(b) new goods and (d) used durable goods.
3. The parties have continued to negotiate and thestated purchase price for the assets constituting the Operating Unit is nowless than $53.1 million (it is about $50 million), but the parties stillcontemplate that the definitive agreement will contain the Buyer's commitmentsto lease and buy the Equipment that was the subject of the commitments in theLO1 and may refer to the commitments as "consideration." There isstill no purchase price specified in the agreement for the Equipment,
4. The lease of the Equipment is to be at a marketrate.
5. The purchase of the Equipment will be at marketprice.
6. The Buyer has determined it is not paying a premiumfor either the lease or purchase of the Equipment. However, the purchase priceof the Equipment added to the purchase price of the Operating Unit, wouldexceed $53.1 million i.e., the purchase price of the Equipment will be inexcess of $4 million.
Youagreed with us that the transaction as outlined above is not reportable becausethe lease and purchase of the Equipment would be exempt as transactions in theordinary course of business and that this would not change because they areincluded in the same contract with the sale of the Operating Unit. Please letus know if the above does not accurately describe our conversation and yourconcurrence.