Question
From: (redacted)
Sent: Sunday, June 10, 2007 3:48 PM
To: Verne, B. Michael
Subject: Solely for purpose of investment
Mike,
I have a situation in which aCompany A (a seller) will acquire share consideration in Target T that wouldotherwise trigger a filing but for application of the solely for the purpose ofinvestment exemption. Company A will acquire less than 3% of the votingsecurities of Target T and its investment will be entirely passive.
Company A holds a 15% economicinterest in Partnership P, but does not control Partnership P for HSR purposes.Partnership P holds a 5-7% interest in the voting securities of Target T andhas representation on Target T's board of directors. It is likely that inrespect of Target T, Company A and Partnership P will have aligned votes, butthere is no agreement that they will vote their shares together.
Do we need to combine Company A andPartnership P's holdings in respect of Section 802.9 tests? If so, theircombined holdings in Target T might be over 10% (it is unclear) and if therules dictate that I must consider Company A and Partnership P to be actingtogether, then Partnership P's board rights would seem to convert Company A'sinvestment from passive to active.
I am inclined to think I do not needto combine these two entities for the purposes of Section 802.9. Extrapolatingfrom Interpretations 150 and 196, which are admittedly not exactly on point, itseem would that one does not need to combine when entities are "undercommon de facto control when the control tests are not satisfied."
Could you let meknow whether you agree with my conclusion or need additional information inorder to provide some guidance? As always, thanks for your help.
(redacted)