Question
From:(redacted)
Sent:Friday, March 09, 2007 9:03 AM
To:Verne, B. Michael
Cc:(redacted)
Subject:HSR question
Mike- Would appreciate your views on the following. Thanks very much.
CompanyB had a letter of intent to acquire Company C and Company D.
Ourclient, Company A then approached Company B and suggested Company A acquireCompany B, as well as Companies C and D. However, rather than acquire Company Bafter it had acquired Companies C and D, Company A would like to makesimultaneous (or near simultaneous) acquisitions of B , C and D which would beconditional on each other. In other words a condition to closing on each ofthem would be that the others would be closing as well. The reason is thatCompany A would like separate reps and warranties from each of Company B, C andD. It could not get such reps and warranties from Company B with respect toCompany C and Company D if Company B owned Company C and Company D only for secondsbefore the sale to Company A. In addition, there are tax reasons for it toacquire at least Company B and Company D directly. The HSR implications did notfactor into the structure decision. The size-of-the-transaction values for theacquisition of each company will be below $59.8 million. In the aggregate, ourclient will pay the 3 UPEs' shareholders more than $59.8 million. We believethat the transaction is not reportable and that our client has ample businessjustification for the separate agreements and that it was not structured toavoid HSR notification. Do you agree?
Doesthe analysis change if there is a single agreement in which
CompanyA acquires Company B, C and D separately. The agreement would have someportions that applied to all three transactions, but other sections wouldinvolve separate representations and warranties that Company A would receivedirectly from B, C and D. There would be one agreement for ease of negotiation.Since A, B and C are separate UPEs and the size-of-the-transaction is below$59.8 for each separate transaction, we believe the transaction, even ifstructured under as separate acquisitions under a single purchase agreement,would not reportable and does not raise 801.90 avoidance issues. Do you agree?