Question
From:(redacted)
Sent:Tuesday, September 19, 2006 2:31 PM
To:Verne, B. Michael
Subject:Sale of two subsidiaries as a package
[Confidential] Michael:
I have an issue with respect to the HSR treatment ofthe sale of two subsidiaries as a "package" and I cannot finddefinitive guidance on it. I think I know the answer, but wanted to confirm.Here are the facts:
CompanyA is a venture capital fund. It is the UPE of Company B. Company B has twosubsidiaries, Company X and Company Y.
CompanyX and Company Y have been offered for sale as a "package." The draftsecurities sales agreement identifies each as a separate company and the stockof each will be purchased by a single buyer. Currently, it is expected thatcombined, the purchase price for the stock of both companies will be over $100million. After Company X and Company Y are sold, Company B will have no value.
Hereare my questions:
(1)Should the purchase of Company X andCompany Y should be treated as two separate transactions. I think the answer isyes, but would appreciate confirmation of this.
(2)If the purchase of Company X and CompanyY are to be treated as two separate transactions, then the purchase price mustbe allocated to each company. (Presumably by the buyer?) Is this correct?
(3)(Assuming size of the parties test ismet) If the purchase price is allocated, and Company X is valued at $60 millionand Company Y is valued at $40 million, then an HSR is not required for CompanyY. Is this correct?
Iappreciate any guidance that you can provide.