Question
(redacted)
To: Michael Verne
FTC Premerger Notification Office
From:(redacted)
Date:October 21, 1999
Re: Will Individual Recipients of Surviving Corporation's Stock Have to Make HSR Filings?
Our client, (redacted), intends to acquire through merger a smaller entity, (redacted) Corporation. (Redacted) will file HSR notification. In order to avoid triggering default provisions in (redacted) debt instruments (redacted) will merger into (redacted) which will survive under state corporation law. The surviving corporation will immediately be renamed (redacted) and (redacted) existing board of nine directors, with the addition of two directors from (redacted) will govern the surviving corporation. Will present (redacted) shareholder/directors, who individually receive in excess of $15 million in the surviving corporation's stock, have to file HSR as acquiring persons?
Section 801.2(d)(1) of the HSR regulations states:
In a merger, the person which, after consummation, will include the corporation in existence prior to consummation which is designated as the surviving corporation in the plan, agreement, or certificate of merger required to be filed with state authorities to effectuate the transaction shall be deemed to have made an acquisition of voting securities.
Section 801.2(d)(2)(i) states:
Any person party to a merger or consolidation is an acquiring person if as a result of the transaction, such person will hold any assets or voting securities which is did not hold prior to the transaction.
Lastly, 801.2(a) states:
Whenever voting securities or assets are to be acquired from an acquiring person in connection with an acquisition, the acquisition of voting securities or assets shall be separately subject to the act.
While the regulations appear to make pivotal which corporation survives under the documents filed with state authorities, this leads to a bizarre result when the name and control of the nominally disappearing corporation are transferred to the surviving corporation. Three or four individual shareholders, whose company is making an acquisition, would b required because of the mechanics of corporate law each to pay a $45,000 fee and file an HSR notification. There would seem to be no antitrust jurisdiction for these individual filings.
Do these individuals have to file?
Thank you for your assistance.
cc: (redacted)