Question
March 4, 1994
BY HAND DELIVERY
Richard Smith, Esquire
Premerger Notification Office
Federal Trade Commission
6th Street and Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Re: Informal Policy of the Premerger Notification Office with
Respect to the Acquisition of a REIT by a REIT
Dear Dick:
I am writing to confirm my understanding of the informal policy of the Federal Trade Commissions Premerger Notification Office with respect to the acquisition of a real estate investment trust (REIT) by a REIT. In our telephone conversation of February 23, 1994, you said that it is the informal policy of the Premerger Notification Office that the acquisition of a REIT by a REIT is not a reportable event under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR or the Act). The purpose of this letter is to confirm that the transaction described below would fall within this policy and would not be reportable under the Act.
Company A is a REIT, organized as a corporation under the laws of California. Company A has one class of voting common stock outstanding. Company B is also a REIT, organized under the laws of California. Company B has one class of convertible preferred stock outstanding. Each of Company A and Company B is its own ultimate parent entity.
Under the terms of the proposed transaction, Company A will merge with and into Company B, with Company B surviving. The outstanding shares of Company A common stock will be converted into cash and/or shares of Company B common stock, at the election of each Company A shareholder. However, no more than 50% of the Company A common stock will be converted into cash. The outstanding common stock of Company B will not be converted or exchanged as a result of the merger.
I assume that the acquisition described above would fall within the FTCs informal policy that the acquisition of a REIT by a REIT is not reportable. If you do not agree with this conclusion, or if you need additional information in order to make a determination, please contact me at (redacted). If you do not contact me, I will assume that you agree with this conclusion.
Thanks for your help and attention to this matter.
Very truly yours,
(redacted)
(redacted)
STAFF COMMENTS: 3/11/94
Advised writer that a REITs purchase of the assets or voting stock of another REIT is exempt under 7A(c)(1). However, the acquisition of the voting stock of a REIT by someone other than a REIT, such as by the shareholders of Company A after its merger into REIT B, is potentially reportable as a voting stock purchase.
R.B. Smith