Question
August 1, 2008
VIA FEDEX AND E-MAIL
Premerger Notification Office
Bureau of Competition, Room 303
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
Attn: Janice Johnson
Re: Acquisition of Remaining PartnershipInterest by 50% Partner in an Existing General Partnership
Dear Ms. Johnson:
This will confirm our telephone conversationof Wednesday July 30, 2008, regarding applicability of the Premerger Notificationfiling requirements, under the Hart-Scott-Rodino Antitrust Improvements Act of1976,15 U.S.C.A. l8a et seq., as amended the ("HSR Act"),to my client's proposed transaction, described below.
My client is currently the owner of a fiftypercent (50%) partnership interest in an existing two-partner generalpartnership (the "Partnership"). The other partner, of course, holdsthe remaining fifty percent (50%) partnership interest in the Partnership (the"Target Interest"). The fifty percent (50%) partnership interest heldby my client entitles it to fifty percent (50%) of the profits of thePartnership, as well as 50% of the assets of the Partnership upon dissolution.The Target Interest, similarly, entitles its holder to fifty percent (50%) ofthe profits of the Partnership, as well as 50% of the assets of the Partnershipupon dissolution. Thus, pursuant to 16 C.F.R. 801.1(b)(I)(ii), my clientwould be deemed to "control" the Partnership (and the holder of theTarget Interest would similarly be deemed to "control" thePartnership). My client intends to purchase the Target Interest throughexercise of an existing purchase option right. For purposes of our discussion,it was conceded that the proposed terms of that contemplated transaction, aswell as the size of the parties involved, would otherwise satisfy both theminimum "size of transaction" and the "size of persons"tests necessary to trigger the premerger notification filing requirements underthe HSR Act.
As we discussed, based on the foregoing facts,it is my belief that my client's proposed transaction would not require apremerger notification filing under the HSR Act, under either of two separatetheories: (i) the proposed transaction would qualify as an"intraperson" transaction pursuant to 16 C.F.R. 802.30, whichstates that a transaction is exempt from the HSR Act's notification filingrequirement if the acquiring person and at least one of the acquired personsare included within the same "person," within the definition of thatterm in 16 C.F.R. 801. 1(b)(l); and (ii) to the extent that an acquisition ofa non-corporate interest (such as a partnership interest) does not "confercontrol" of the underlying non-corporate entity, the acquisitiontransaction is not subject to the notification filing requirements under theHSR Act. With respect to the "intraperson" exemption, since my client"controls" the underlying Partnership, my client would be deemed tobe both the acquiring person and an acquired person, pursuant to 16 C.F.R. 801.2, in regard to the proposed transaction, and the transaction would thussatisfy the exemption requirements under 16 C.F.R. 802.30. Moreover, withregard to the second basis for exemption, since my client already"controls" the Partnership by way of my client's fifty percent (50%)partnership interest, its proposed acquisition of the remaining fifty percent(50%) interest will not result in or "confer" control. Thus, it is myconclusion that, under either of the foregoing theories, my client's proposedacquisition of the Target Interest will be exempt from the requirement to filea Premerger Notification Form pursuant to the HSR Act. It is my understandingfrom our telephone conversation that you concur with this analysis.
Please contact me if I have not accuratelydescribed your understanding of our telephone conversation or if you havequestions or would like any additional information. My direct line is (redacted)
.