Question
From: (redacted)
Sent:Monday, August 25, 2006 6:33 PM
To:Verne, B. Michael
Subject:HSR question
DearMr. Verne,
I have a question about howthe name of the acquired person(s) ought properly to be reflected on the HSR notificationand report form where some entities involved in an aggregated purchase ofassets have more than one ultimate parent entity.
Facts:
CorporationsA, B and C are each separately selling substantially all of their assets to thesame buyer. The value of Corporation A's assets is approximately $33 million.The value of Corporation B's assets is approximately $2 million. The value ofCorporation C's assets is approximately $38 million. The total purchase pricefor all assets being acquired is approximately $75 million. The purchases areexpected to close simultaneously.
Thevoting securities of Corporation A are owned 50% by Revocable Voting Trust #1and 50% by Revocable Voting Trust #2. Similarly, the voting securities ofCorporation B are owned 50% by Revocable Voting Trust #1 and 50% by RevocableVoting Trust #2. The voting securities of Corporation C are owned 54% byRevocable Voting Trust #1.
My Analysis:
Itseems clear that the settlor of Revocable Trust #1 is the sole ultimate parententity of Corporation C and that the settlor of Revocable Trust #1 is also anultimate parent entity of both Corporation A and Corporation B. However,Corporation A and Corporation B also each have a second ultimate parent entity,the settlor of Revocable Trust #2. Thus, as noted in Example 3 in Rule 801.1(a)(3)'sdefinition of "ultimate parent entity," Corporation A and CorporationB are each part of two acquired persons (i.e., the persons of which thesettlors of the two revocable trusts are each the ultimate parent entities),while Corporation C is part of only one acquired person (of which the settlorof Revocable Trust #1 is the ultimate parent entity).
It also seems clear that thethree transactions must be aggregated under Rule 801.13(b) and that the resultis a reportable transaction.
Question:
How should the fact thatCorporation A and Corporation B are part of two acquired persons be reflectedon the HSR form in, for example, Item 1(a)? It has been suggested to me that(1) because the settlor of Revocable Trust #2 would have had no reportingobligation if only the assets of the two corporations of which he is anultimate parent entity were being acquired and (2) because it is theacquisition of Corporation C's assets that causes the three transactions to bereportable under the aggregation rule, only the settlor of Voting Trust #1 (theUPE of Corporation C) should be considered the "acquired person" forpurposes of completing the notification and report form. I am concerned,however, that if the PNO sees in our response to Item 1(f) that there are twoUPE's for two of the selling corporations, our filing could be deemed in someway deficient unless we list both UPE's as acquired persons in Item 1(a).