Question
From: (redacted)
Sent: Monday,March 20, 2006 6:56 PM
To: Verne,B. Michael
Subject: HSRQuestion
Mike, I believe this isfairly straight forward under 8012(d) especially under the new LLC rules andperhaps it just involves one of the anomalies under the HSR Act. LLC A and LLCB are their own UPE and both have over $100 million in sales and assets. B isgoing to be merged into A with A as the surviving entity and members of B willobtain membership interests in A. B has been determined to have a value of $12million and A $70 million. Based on these values, the members of B will obtainapproximately 15% of A. No one will control A after the merger. Because A isthe surviving entity under 801.2(d), it is deemed to be making an acquisitionof B and if the size-of-transaction is the $12 million valuation of B then nonotification is required. Because no one controls A after the merger then thereis no notification of that part of the merger. Also, 801.50 does not applybecause this is a merger/consolidation and is not treated as the formation of anew unincorporated entity.
However if A was merged intoB with B surviving and A's members received interests in B totaling 85% then Bwould be deemed to have acquired A and a filing is likely because A is valuedat $70 million. Likewise if A and B were merged into a new entity with acorresponding 85% and 15% membership interest then B would have deemed toacquire A with a notification as well. In the transaction in the firstparagraph no notification is necessary but in the transactions in the secondparagraph, notifications are necessary even though all three transactions endup the same substantively.