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Date
Rule
801.40, 802.30, 802.51
Staff
Michael Verne
Response/Comments
Then everything is exempt. You are correct that C's acquisition of 10% of Target from A and B is exempt under 802.51(b). I would view the contribution of Target shares to SPV as part of the formation, so under 801.40(a), SPV is an acquired person only and not an acquiring person with respect to the shares of Target. Since A, Band C are all foreign, the acquisition of less than 50% of foreign SPV by each would also be exempt under 802.51(b). If SPV will hold 55% of Target in aggregate as a result of the formation, the subsequent acquisition of the remaining 45% (if it occurs at a later date) would be exempt under 802.30(a).

Question

From: Redacted
Sent: Thursday, July 08, 2010 10:25 AM
To: Verne, B. Michael Subject:
RE: question re joint ventures, 802.51

Correct, SPV isforeign and none of A, B or C will control it.

From: Verne, B. Michael[mallto:MVERNE@ftc.gov}
Sent: Thursday, July 08, 2010 10:18 AM
To: Chen, Redacted
Subject: RE: question re joint ventures, B02.51

Two questions -isSPV foreign as well? I assume that none of A, B or C will control SPV?

From Redacted
Sent: Wednesday, July 07, 2010 3:49 PM
To: Verne, B. Michael
Subject: question re joint ventures, 802.51

Dear Mike,

I have a questionabout which is the triggering event in a multi-step transaction, and wouldappreciate your advice.

Target has two majorshareholders (call them A and B), not under common control. A holdsapproximately 30% of the shares of Target and B holds about 2S%. A, B andTarget are all non-US.

A thirdshareholder, C, wishes to invest in Target, by buying some of the shares held byA and B. In order to accomplish this, C will purchase approximately 10% of theshares held by A and B (likely 5% from each). C is also a non-US person, andnot under common control with A or B.

The parties wish tocombine their share holdings in a new joint venture -a special purpose vehicle.I believe this SPV will hold nothing other than the shares in Target held by A,Band C. Combined shareholding in Target by the SPV will be around 5S%. The SPVmay later make a bid for the remaining 45% of Target.

My analysis is asfollows, please let me know if you agree.

(1) Thepurchase of 10% of the shares of Target by C from A and B would not trigger afiling obligation, as this acquisition is exempt under B02.51(b).

(2) Thecreation of the SPV will not trigger a filing for A, B, or C as acquiringpersons, as each will continue to hold through the SPV the interests eachalready held in Target and nothing else.

(3)However, at the time that A, Band C contribute their shares to the SPV, afiling is triggered for the SPV as an acquiring person for its interest inTarget, as it will hold 55% of the shares of Target, which is non-US but has USsales above the current threshold. The triggering event for the HSR filing isthe contribution to the SPV of 50% of the shares of Target.

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