Skip to main content
Date
Rule
802.30
Staff
Michael Verne
Response/Comments
What an odd transaction. I think the first scenario is exempt under 802.30 because Seller holds all of the voting securities of Newco and all of the non-corporate interests in Target LLC. In the second scenario, I assume that Seller will not control Newco by holding of voting securities? If so, the contractual arrangement alone is not enough to constitute control, so 802.30 would not apply.

Question

From:(redacted)

Sent:Friday, May 25, 2007 4:06 PM

To:Verne, B. Michael

Cc:(redacted)

Subject:Intraperson Exemption Question

Mike,

Wehave a question as to whether the following transaction is an intrapersontransaction exempt under 802.30.

Seller plans to restructure before the transactionand place some of its business operations into a wholly-owned LLC subsidiary(Target LLC).

The following steps willoccur simultaneously at or before closing:

1. Company A will create a newly-formed corporation,Newco, and fund it with sufficient cash to acquire 75% of Target LLC.

2. Seller will acquire 100% of the voting securities ofNewco.

3. Company A will acquire nonvoting and convertiblevoting securities of Newco.

4. Newco will then acquire 70-75% of the noncorporateinterests of Target LLC.

5. The size of the transaction with respect to NewCo'sacquisition of the membership interests in Target LLC is above $239.2 million.

6. The transaction was structured for non-HSR taxreasons.

SinceSeller is both the UPE of the acquired entity (Target LLC) and the UPE of theacquiring entity (Newco), would this be an exempt intraperson transaction?

Ifyes, would the exemption still apply if Company A and Seller both have the

contractualright to appoint 2 of 5 Newco board members, with the 5th member being an"independent director" that must be nominated by Seller and approvedby Company A?

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

Learn more about Informal Interpretations.