Question
September 5, 1991
Hy David Rubenstein
Premerger Notification Office
Federal Trade Commission
6th and Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580
Re: Internal Transfer of Partnership Interest
Dear Mr. Rubenstein:
The purpose of this letter is to present you with sufficient information regarding the transaction referenced above in order that the transaction referenced above in order that the Federal Trade Commission (FTC) can make a determination on whether the parties involved in such transaction must file a Pre-Merger Notification under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended, and the regulations promulgated thereunder (the Act).
BACKGROUND
On June 28, 1990, the ownership of (redacted) a regional shopping center located in (redacted) was transferred from (redacted) to (redacted). The two Partners of (redacted) were (redacted)) and (redacted) each owning a 50% interest in (redacted) is a limited partnership composed of (redacted) owing a 74$ limited partnership interest, (redacted) a wholly owned subsidiary corporation of (redacted) and the (redacted) owning a 1% interest and (redacted) a (redacted) owning the remaining 25% interest.
The aforementioned transaction was structured in the following manner. Initially, (redacted) distributed 25% of the assets of (redacted) to (redacted) in exchange for (redacted) 50% partnership interest in (redacted) The partnership Agreement of (redacted) was then amended to increase (redacted) partnership interest in (redacted) from 50% to 66.6% with (redacted) interest deceasing to 33.4% (the Distribution Transaction). Immediately following the distribution to (redacted) conveyed its remaining Principal Transaction). These funds represented (redacted) capital contribution to (redacted) as its contribution to (redacted) then contributed its undivided 25% interest in the (redacted) to (redacted)
In anticipation of the June 1990 conveyances, the parties contacted the FTC and were instructed that the Distribution Transaction and the Principal Transaction would in fact trigger the requirement that the parties file Pre-Merger Notification pursuant to the Act. It was determined that (redacted) was the ultimate parent entity for (redacted) for (redacted) and (redacted) for (redacted)
In connection with the Distribution Transaction, (redacted) filed Pre-Merger Notification reports as an acquiring person and with (redacted) as acquired persons. In connection with the Principal Transaction, (redacted) filed Pre-Merger Notifications as an acquired entity and (redacted) as an acquiring entity. (redacted) and (redacted) received early termination of the waiting period for the Principal Transaction under transaction identification numbers (redacted) and (redacted) and (redacted) received an early termination of the waiting period in the Distribution Transaction under transaction identification number (redacted) Therefore, the FTC reviewed and approved the transfer of 75% of the (redacted) to (redacted) which was and remains under the control of (redacted) by virtue of (redacted) control over 75% interest in (redacted)
ACQUISITION OF REMAINING 25% INTEREST
Currently, (redacted) has offered to sell and (redacted) has agreed to purchase (redacted) remaining 25% interest in (redacted) (the Acquisition Transaction). (redacted) remains the ultimate parent entity for (redacted) and (redacted) for (redacted)
We understand that in transactions involving the transfer or acquisition of an interest or interests in an existing partnership, the Pre-Merger Office takes the position that acquisition of partnership interests is not reportable, except that an acquisition that results in the acquiring person holding one hundred percent of the partnership interests is deemed to be an acquisition of the assets of the partnership.
We think that the Acquisition Transaction should not require reporting. We assume that the rationale for the interpretation that acquisition of one hundred percent of the partnership interests is an asset acquisition is that otherwise no report would occur. However, in this case the FTC has been fully apprised of the facts and should not extend its interpretation to require a second report. To require (redacted) and (redacted) file Pre-Merger Notifications reports would accomplish nothing in furthering the purposes of the Act or the policies of the FTC. The FTC through its May and June 1990 review and approval of the Distribution and Principal Transaction has previously acquiesced to (redacted) acquisition of a controlling 75% interest in (redacted) by virtue of a transfer of the (redacted)ownership to (redacted) and (redacted control over 75% of (redacted)
In the Acquisition Transaction, (redacted) is merely acquiring the remaining 25% interest in (redacted) a partnership in which it is already the ultimate parent entity. The Acquisition Transaction does not represent a transaction where the FTC previously did not have an opportunity to review and approve the transactions which initially gave the acquiring entity (redacted) an interest in the existing partnership. In fact, by review of the Distribution and Principal Transaction the FTC had the opportunity to review and approve the transaction which conveyed a controlling interest in the partnership and in turn the partnerships sole asset, (redacted) Therefore, the undersigned respectfully request that the FTC confirm that the Acquisition Transaction is exempt from the Pre-Merger Notification requirements of the Act.
Respectfully yours,
(redacted)