Question
From:
(redacted)
Sent:
Wednesday, April 23, 20084:12 PM
To:
Verne, B. Michael
Subject: 803.2(a)and 801.2(a)
Mike:
I have a situationin which Newco, an LLC, is making an acquisition of 40% of the votingsecurities of X from Z, a shareholder of X that holds approximately 60% of X'soutstanding shares. Preacquisition, Newco is controlled by Y. The considerationto be paid for the shares of X consists of 70% of the membership interests ofNewco.
Consequently, whenthe dust settles, Z will control Newco whose only holdings are 40% of the v/sof X. Y will no longer control Newco.
Under 801.2(a), anacquiring person is defined as a person who will hold assets or votingsecurities of another person as a result of an acquisition. Y is thepreacquisition UPE but it is not an Acquiring Person per Section 801.2(a).Section 803.2(a) provides that the preacquisition UPE is required to file thenotification but this is at odds with 801.2(a).
In thistransaction, at the end of the day, Z controls Newco which only holds 40% ofthe v/s of X and Z still controls X by virtue of its control of Newcoand its other holdings of shares of X.
Query whether anypart of this transaction is HSR reportable assuming that the size oftransaction test, is met and no exemption applies.
One could take theview that Y, as the preacquisition UPE of Newco, is required to file for theacquisition of 40% of the vIs of X, but Y will not hold these shares asa result of the acquisition.
One could alsotake the view that Z is required to file for the acquisition of control ofNewco. This it seems to me would be reportable assuming it is not exempt under802.4.