Question
September 14, 2005
VIA FACSIMILE
Michael B. Verne
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Avenue, N.W., Room 303
Washington, DC 20580
Re: Reportabilityof Proposed Transaction
Dear Mr. Verne:
This letter will confirm thediscussion you had with (redacted) and me this morning.
In connection with the acquisitionby a shell corporation of a publicly-traded company, we asked whether funds usedto cash out options in a merger should be included in total deal considerationfor the purposes of determining the size of the transaction. You indicated thatthose funds should not be so included.
We also asked whether the acquiringperson must include certain items in its pro forma balance sheet for purposesof calculating whether it meets the size of person test under 16 CFR 801.11(e). The items identified were (i) the payment to cash outoptions mentioned in the paragraph above; and (ii) a payment to employees madeon closing to fund a retirement plan obligation of the target company thatbecomes payable on change of control. You indicated that neither of thesepayments should be included on the pro forma balance sheet and that, in fact,"anything exhausted at the time of acquisition, you do not put on thebalance sheet." We further understand that these payments would not beincluded in total deal consideration for purposes of determining the size ofthe transaction.
Please let us know as soon as possible if this letter does notaccurately reflect our conversation. Many thanks for taking the time to speakwith me and (redacted) this morning.