Question
From:(redacted)
Sent:Monday, May 03, 2004 12:22 PM
To:Verne, B. Michael
Subject: Hypothetical
Hi Mike. Following is thehypothetical that I mentioned in my voice mail message:
Company A currently owns voting securitiesof Company B. Company B intends to repurchase some of its own voting securitiesfrom Company A. As consideration, Company A will receive 100% of the votingsecurities of a Company A subsidiary ("Sub") the assets of which willinclude (1) 100% of the interests in a partnership, the assets of which arevalued at approximately $25 million; (2) a minority voting security interest ina corporation the ultimate parent entity of which is Company A; and (3)contractual rights to a stream of cash payments. The minority voting securityinterest and the contractual rights are valued in excess of $50 million.
If Company A were to receive theseassets directly, no HSR filing would be required because (1) the partnershipassets would fail size of transaction, (2) the minority voting securityinterest acquisition would be an exempt interperson transaction, and (3) thestream of cash payments would be exempt (per my conversation this morning withNancy Ovuka). My question is whether this changes simply because these assetswill be acquired indirectly through the acquisition of the voting securities ofSub. You should know that Company A owns additional voting securities ofCompany B. Accordingly, if the acquisition of Sub is potentially reportable, Iwould have to aggregate the value of its voting securities with the value ofthe Company B securities already owned by Company A.