Question
(redacted)
April 25, 1983
Ms. Sandra Vidas
Office of Premerger Notification
Federal Trade Commission
7th and Pennsylvania Avenue, N.W.
Room 301
Washington, D.C. 20580
Dear Ms. Vidas:
I want to thank you, and Mr. Patrick Sharpe, for your
kind assistance on Friday. I understand, based on my con-
versatons with you Friday, April 22, that the following
transaction would not require a Hart-Scott-Rodino filing.
Our Client, Company a, has total assets of over $100
million and is presently the sole owner of a subsidiary,
Company B, worth $45,000,000. Company C, formed less than
1 year ago, currently has $300,000 worth of stock outstanding,
all of it owned by Company D, which also has assets valued
at more than $100 million. Sometime between now and August 1,
1983, Company C will issue 3,6,000,000 shares of stock, for
approximately $10 per share. It is contemplated that 80.1%
Of the shares will be sold in a public offering, and that
Company A will purchase 19.9% of the newly issued stock,
worth about $7,000,000. After this transaction, no other
entity, including Company D, will control Company C.
On or around August 1, Company C will acquire all of the
stock in Company B from its present owner, Company A. The
purchase price will be $45,000,000. After this transfer,
Company Cs total assets will be less than $10,000,000 not
including the value of the acquired Company B. In fact,
Company C will probable then be in debt to Company A.
From our recent telephone conversations, I gather that
a newly formed corporation, such as Company C, does not meet
the size of person test if, after the transaction ins question,
it has less than $10,000,000 in assets, excluding the worth
of the acquisition. Since Company C, when it purchases
Company B from our client, will be under no other companys
control and will not be worth $10,000,000, it is not obligated
to file a premerger notification.
It also appears that company As purchase of $7,000,000
worth of Company Cs common stock is exempt, under Section 802.20,
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and the voting securities acquired do not confer control over
Company C.
I would appreciate it if you would let me know if the
above analysis is correct, or if you need more information.
Sincerely,
(Redacted)