Question
From:(redacted)
Sent:Wednesday, October 04, 2006 11:29 AM
To:Verne, B. Michael
Subject:Revised Valuation Question
Dear Mike,
Aslightly revised question relating to tender offer threshold filing fees. Myclient, X, is acquiring Target, which is listed on a foreign exchange, in acash tender offer.
Xplans to offer a fixed amount (in foreign currency) of consideration to be paidfor each share of Target. X plans to acquire 50% of the Target but will accept100% of the shares tendered. Thus, X is prepared to hold 100% of Target'svoting securities after the tender offer.
Under 801.10(a)(1), the value of the voting securities is the market price of thesecurities or, if the acquisition price has been determined, the greater of themarket price and the acquisition price.
Under 801.10(c)(1)(i), the market price of the voting securities is the lowestclosing quotation within the 45 or fewer calendar days prior to Target'sreceipt of the 803.5 letter.
Althoughthe acquisition price is fixed in foreign currency, the U.S. dollar equivalentchanges from day to day according to the exchange rate. You have advised othersthat an acquisition price fixed in foreign currency may render the acquisitionprice undetermined (within the meaning of 801.10(a)) and, thus, the marketprice should be used to calculate the value for filing fee purposes.http:11www.ftc.govIbc/hsr/informal/opinions/0409007.htm
SinceX is prepared to accept 100% of the tendered shares of the Target but theacquisition price is undetermined because of currency fluctuation, we believethat X should value the transaction for purposes of the filing fee by using themarket price for 100% of the Target's voting securities. Do you agree?