Question
December 15, 1994
BY HAND DELIVERY
Richard B. Smith
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th & Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580
Dear Dick:
I am writing as a follow-up to my December 2, 1994 letter (Attachment A hereto) and our subsequent telephone calls. You have confirmed, based on discussions within the Premerger Notification Office, that the transactions described in the letter would be nonreportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the implementing regulations.
As I have explained to you, however, the structure of the contemplated transactions has been slightly revised from what was described in my December 2 letter. This letter memorializes the advice you provided over the telephone on December 13 that under the revised structure, the transactions would remain nonreportable.
The revised structure involves the same persons (the partnership, A, B, and C), person sizes, and amounts of acquisition consideration, as described in my December 2 letter. The partnership, as ultimate parent, would still first acquire assets from A, and thereafter acquire voting securities from B and C. The acquiring entity structure, however, would be slightly different.
Under the original structure, the partnership would initially create a single wholly-owned subsidiary, Newco, that would, in turn, create Sub1, Sub2, and Sub3, as wholly-owned acquiring entities. Under the revised structure, the Partnership would create two wholly-owned subsidiaries, Newco1 and Newco2, as the acquiring entities.
Under the revised structure, the acquisitions would then take place in two steps:
Step 1. Through Newco1, the Partnership (as UPS) would first acquire assets from A for cash
Step 2. Thereafter, through New2, the Partnership (as UPE) would acquire simultaneously 100% of the voting securities of subsidiaries of B and C, and 100% of the voting securities of Newco1. As consideration, B would receive cash and voting and nonvoting securities of Newco2; C would receive voting securities of Newco2; and the Partnership would also receive voting securities of Newco2 (in addition to the voting securities of Newco2 it already held). As before, after the transaction the partnership would remain the UPE controlling Newco2 and the three subsidiaries of Newco2.
You advised that the creation of the Partnership would remain an exempt partnership formation transaction, that the Partnership would be its won UPE, and that the Partnerships creation of Newco1 and Newco2 would be exempt under 802.30.
You advised further that the Partnerships acquisition fo assets from A in Step 1 would remain nonreportable because the Partnerships size-of-person under 801.11(e) would be less than $10 million. You also advised that the subsequent transactions in Step 2 would be nonreportable, regardless of whether these transactions are analyzed under 801.40 or simply as acquisitions by the Partnership, because none of the persons involved - - the Partnership, B, and C - - would meet the $100 million size-of-the-person test.
If this letter does not accurately reflect the advice you provided concerning the nonreportablility of the transactions described above, please call me as soon as possible.
As always, I thank you for your time and assistance.
Very truly yours,
(Redacted)
Enclosure