Question
From: (redacted)
Sent: Tuesday, July 20, 2004 4:33 PM
To: Verne, B. Michael
Subject: Exemptionfrom Per-Merger Notification Filing Requirements
Mr. Verne:
I believe thefollowing transaction would be exempt from the pre-merger notification filingrequirements:
DS is the founderand Chairman of the Board of Directors of X, but does not control X. DS hasestablished two partnerships A and B for charitable and estate planningpurposes. LLC is wholly owned by DS.
Partnership A -LLC contributed approximately $5,000 of X's stock for a 1 % general partnerinterest. DS contributed approximately $475,000 of X's stock for a 96.98%limited partner interest. KB contributed approximately $10,000 of X's stock fora 2.02% limited partner interest.
Partnership B -LLC contributed approximately $2,000 of X's stock for a 1 % general partnerinterest. DS contributed approximately $220,000,000 of X's stock for a 98.94%limited partner interest. KB contributed approximately $130,000 of X's stockfor a .06% limited partner interest.
ProposedTransaction - B desires to sell $220,132,000 of X's stock to A in exchange foran annuity obligation.
I believe thatDS is the ultimate parent entity of A so DS is the acquiring person. X is theacquired person. Section 7A(c)(10) provides that "acquisitions of votingsecurities [are exempt], if, as a result of the acquisition, the votingsecurities acquired do not increase, directly or indirectly, the acquiringperson's per centum share of the outstanding voting securities of theissuer." In this fact situation, DS is essentially transferring X stockfrom one partnership controlled by him to another partnership controlled byhim. His ownership in X will not increase as a result of this transaction.Based upon the exemption in Section 7A(c)(10) of the Clayton Act, I don'tbelieve DS or X would need to file a pre-merger notification form.
I wouldappreciate your opinion as to whether you believe this exemption would applyunder this fact situation. I would also appreciate your opinion as to whetherDS and X would need to file a pre-merger notification form.