Question
From:
(Redacted)
Sent:
Monday, January 14, 2013 11:15 AM
To:
Verne, B. Michael
Subject:
Questions on Items 4(c) and 4(d)
HiMike,
Ihope you're doing well. I write to ask a couple of questions about Items 4(c)and 4(d).
First,I have a question about the "clean break" rule. Assume that Buyer A andCompany B discussed a transaction four or five years ago (the "oldtransaction") where Buyer A was considering buying a business (the"Target Business") from Company B, but Company B then sold a 50%interest in the Target Business to Third-Party C, marking a clean break to theold transaction between A and B. Today, however, Company B and Third-Party C,both ultimate parents now for the Target Business, are selling the TargetBusiness to Buyer A (the "current transaction"). In the course of evaluatingthe current transaction, officers of Buyer A dust off and review andanalyze due diligence and other files from the old transaction, and these filesfrom the old transaction discuss Item 4(c) and 4(d)-related content. However,Buyer A's review of the old files is passive in that Buyer A does not attachthem as an exhibit to a new otherwise 4(c) or 4(d)responsive report analyzingthe current transaction.
Inthis situation, where Buyer A simply reviews or analyzes files from the oldtransaction, my understanding is that the old files are not 4(c) or4(d)-responsive for the current transaction. Rather, to be 4(c) or 4(d)responsive for the current transaction, Buyer A would have to attach them as anexhibit to a new report that analyzes the current transaction with regard to4(c) or 4(d) topics. Is my understanding correct?
Second,on Item 4(d)(iii), I would like to confirm the guidance from the FTC websitethat "If a document makes a reference to synergies with no quantifieddollar amount attached (e.g., the deal with result in synergies) this is notenough to make a document responsive to Item 4(d)(iii)."
Iread this guidance to mean that a document must actually state a specificdollar amount to be responsive to Item 4(d)(iii). Thus, if a document describesand analyzes various categories of synergies that could be expected to flowfrom a transaction --but the document does not quantify a dollar value of theseexpected synergies -then the document is not responsive to 4(d)(iii).
Similarly,if one document (Doc. #1) estimates that $50 million in synergies will flowfrom a merger, and Doc. #1 gives the assumptions that went into that estimate,then Doc. #1 is 4(d)(iii)-responsive. But if a separate document (Doc. #2) alsohappens to describe the synergies --without mentioning any dollar estimate--then Doc. #2 is not 4(d)(iii)-responsive, even if Doc. #2 gives a moredetailed description of the synergies than Doc. #1 gives.