Question
From:(redacted)
Sent:Monday, March 19, 2007 9:04 PM
To:Verne, B. Michael
Subject:FW: Filing obligations in "double dummy" transaction
Mike,
Justwanted to make sure this didn't fall through the cracks while you were out onFriday.
Thanks,
Brent
--Original Message---
From:(redacted)
Sent:Friday, March 16, 2007 1:39 PM
To:'mverne@ftc.gov'
Subject:Filing obligations in "double dummy" transaction
Mike,
Inlight of the complexity of my transaction, I thought it would be more helpfulto write you rather than try to describe the deal over the phone.
Theessence of this transaction is a merger between Company A and Company B, eachof which is its own ultimate parent. For tax reasons, however, this transactionwill have the "double-dummy" structure described below.
Forpurposes of this transaction, Company A has set up a new company("Newco"), which it controls. Newco in turn has two subsidiariescalled Dummy A and Dummy B. In the proposed transaction, Dummy B will mergewith and into Company B, with Company B being the surviving entity. Immediatelythereafter, Dummy A will merge with and into Company A with Company A being thesurviving entity. As a result of these transactions, Company A and Company Bwill each be wholly-owned subsidiaries of Newco.
In consideration, theshares held by Company A's shareholders will be converted into the right toreceive approximately 17.5 million shares of Newco common stock. Each shareheld by Company B's shareholders will be converted into a right to receive: (1)one share of Newco common stock; or (2) one share of Newco common stock and anon-transferable right to purchase a share of Newco common stock for $19.00 pershare; or (3) one share of Newco common stock and a non-transferable right torequire Newco to repurchase that newly issued share for $20.00 per share. Thetotal consideration paid to Company B's shareholders will be approximately $300million and the total consideration paid to Company A's shareholders will beapproximately $350 million.
Dependingon which election is chosen by Company B's shareholders, Company Bsshareholders could ultimately hold anywhere between 35% to 59% of Newco as aresult of the transaction.
My questions are thefollowing:
1) Am I correct thatboth Company A and Company B must file both as acquiring and acquired entities?
2) Is there a filing obligation for Company Ashareholders that will hold more than $59.8 million worth of Newco securitiesas a result of the transaction?
3) Is there a filing obligation for Company Bshareholders that will hold more than $59.8 million worth of Newco securitiesas a result of the transaction?
Please call me if youneed more information or you would prefer to discuss this over the phone.Thanks,