Question
From:(redacted)
Sent:Wednesday, May 17, 2006 4:42 PM
To:Verne, B. Michael
Cc:(redacted)
Subject:HSR Discussion 802.4 and 802.50
Mike,thank you for taking the time to speak with (redacted) and me today. Below is asummary of the fact pattern we discussed and our request for confirmation ofthe analysis.
FactPattern: US Company A ("Acquirer") intends to acquire, pursuant to aStock Purchase Agreement, 100% of the voting securities of US Company B("Target") for a purchase price in excess of $56.7 million. Each ofAcquirer and Target satisfy the HSR size of person test. Target, for its mostrecently completed fiscal year, had total annual sales of more than $56.7million in or into the US and consolidated total assets of more than $56.7million.
Whilemost of the operations of Target are US based, Target has some non-USsubsidiaries servicing its sales operations in certain countries. These non-USassets of Target did not generate more than $56.7 million in sales in or intothe US during the last fiscal year.
HSRIssue: Does 802.4, read in conjunction with 802.50, apply to make thetransaction non-reportable if the fair market value of Target's US assets isbelow $56.7 million?
HSRAnalysis: As amended in April 2005, section 802.4 provides in relevant part:"An acquisition of voting securities of an issuer...whose assets togetherwith those of all entities it controls...consist of assets whose acquisition isexempt from the requirements of the Act pursuant to...this part 802...is exemptfrom the reporting requirements if the acquired issuer...and all entities itcontrols do not hold non-exempt assets with an aggregate fair market value ofmore than [$56.7M]."
Theassets of Target located outside of the United States and held by non-USentities would be exempt assets under 802.50 because these non-US assets didnot generate more than $56.7 million of sales in or into the United States inTarget's most recent fiscal year. Assuming that the Acquirer's Board ofDirectors or its designee determines, in accordance with 801.10(c)(3), that thefair market value of Target's non-exempt assets (i.e., its US assets) is lessthan $56.7 million, the transaction would be exempt from reporting underSection 802.4.
Please let us know if this accurately reflects ourdiscussion. Regards,