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Date
Rule
802.51
Staff
Michael Verne
Response/Comments
Correct use fair market value.

Question

From:(redacted)

Sent:Monday, August 07, 2006 2:24 PM

To:Verne, B. Michael

Subject:Question re 802.51

Mike,

I am seeking clarificationon the appropriate method of valuing US assets for purposes of 802.51.

Assumethat a US person is buying a non-US entity that has US subsidiaries and some US assets.Based on its most recent annual financials, the target entity has about $2million in US sales (this includes sales of parent and all of its controlledentities on an aggregated basis). The most recent regularly prepared balancesheet of the target shows total worldwide assets of only about $5 million inthe US. We are not yet sure whether the parent's most recent balance sheetincludes the value of the US assets held by the US subsidiaries. However, Iassume that based on the following interpretation, we would NOT look at thebook value of the assets on the most recent regularly prepared balance sheetfor the parent or for any unconsolidated US entities (under 801.11(c) and b(1)), but the Buyer would instead need to examine the fair market value of theUS assets held by the parent and any of its subsidiaries.

http:l/www.ftc.govIbc/hsr/informal/opinions/0506003.htm<http:l/vvww.ftc.govIbc…;

Please let me know if I have this wrong. Thank youfor your help.

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