Question
From:(redacted)
Sent:Friday, February 16, 2007 12:38 PM
To:Verne, B. Michael
Subject:JV Formations
HiMike,
We've recently been asked to assess the reportabilityof several joint venture formations and just want to be sure that we areapplying the correct analytical framework.
The"formations" are usually structured in one of two ways:
(We can assume that the size of transaction andperson tests are met and that the transactions are not otherwise exempt -- e.g.by way of 802.4 and 802.30, etc.)
Structure1: "True" or "One-stage" JV formation
A andB form a new corporation "JV Corp." A contributes X assets in returnfor 50% of the voting securities of JV Corp and B contributes Y assets inreturn for 50% of the voting securities of JV Corp.
FilingObligations: A and B each have to file an HSR as an acquiring person for theirrespective acquisitions of 50% of the voting securities of JV
Corppursuant to 801.40 and complete Item 5(d) of the HSR Form. JV Corp is theacquired person but is not required to file pursuant to 802.41.
Structure2: "Two-stage" formation
Aforms a wholly-owned subsidiary "JVSub Corp" and contributes X assets(or the voting securities of X subsidiary) to JVSub Corp.
Bcontributes Y assets (or the voting securities of Y subsidiary) to JVSub Corpin exchange for 50% of JVSub Corp's voting securities.
FilingObligations: The formation of JVSub Corp is exempt pursuant to 802.30. A must fileas an acquiring person for its acquisition of Y assets/voting securities and asan acquired person for B's acquisition of 50% of JVSub Corp. Similarly, B mustfile as an acquired person for A's acquisition of Y assets/voting securitiesand B also must file as an acquiring person for its acquisition of 50% of JVSubCorp.
Is ouranalysis correct, or should we be treating both types of structures under801.40 (or 801.50 for non-corporate JVs).
Weoften receive these types of reportability questions before the structure isfully defined, with the parties wanting to file on the basis of a signed MUO orL01. If our analysis is correct, does the PNO have a preference for how wetreat JV formations when it's not entirely clear which of these two structures willbe adopted. Would the filing(s) still be valid if the alternate structure isadopted (note that the acquired