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Date
Rule
801.40, 802.31
Staff
Michael Verne
Response/Comments
this is not reportable.

Question

From:(redacted)

Sent:Monday, May 22, 2006 3:56 PM

To:Verne, B. Michael

Subject:HSR 801.40 Question

Aquestion regarding 801.40:

A forms a new corporation, Newco,to acquire 100% of the non-corporate interests of B for $200 million.

C(B's CEO) will acquire 100% of Newco's voting securities for $5 million.

Awill loan Newco $200 million to acquire B. In exchange, A will hold Newcoconvertible voting and nonvoting securities.

(1)A is a $113.4+ million person.

(2)Newco is a newly-formed entity without abalance sheet, no assets and is its own UPE until after closing (after closingC will be B's only UPE).

(3)B is a $113.4+ million person.

(4)C (B's CEO) assets are unknown so far.

Ouranalysis is as follows:

Under 801.40, even if the special size-of-personthresholds are met, no filing is required because:

- although A is an acquiring person and a contributor(Int. #179), A is exempt from reporting because of the 802.31 exemption(acquisitions of convertible voting securities).

- B is an acquiring person and a contributor (Int.#179) but B's acquisition of Newco's voting securities for $5 million does notmeet the size-of-the-transaction threshold.

Undera traditional acquisitions analysis (non-801.40), a filing is not requiredbecause:

- Newco does not meet either size-of-person thresholdas its only assets are to be used to acquire B (and it does not have aregularly-prepared balance sheet)

- A's acquisition of Newco's convertible votingsecurities is exempt under 802.31.

Is our analysis correct?

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