Question
From: (redacted)
Sent: Tuesday, April 24, 2007 3:29 PM
To: Verne,B. Michael
Subject: complexacquisition
Dear Mike,
I am analyzing a rather complextransaction by a private equity company, and I'd appreciate your opinion as towhether I've properly determined HSR reportability. I've attached a diagram ofthe basic structure.
Two groups of investing partnershipswill acquire a Target ("Group 1" and "Group 2"). (Thoughthe two groups of investing entities are affiliated with the same privateequity company, the two groups are not under common control for HSR purposes.)They will acquire Target through a non-US Newco. Newco's voting securities willbe held 50-50 by Group 1 and Group 2. However, Group 1 consists of 6 separatelimited partnerships not under common control for HSR purposes, and Group 2consists of only 1 limited partnership at present ("Group 2 LP"), andwill still consist of only 1 LP at acquisition.
It seems to me that Group 2 LP willbe the UPE of Newco, by virtue of holding 50% of the voting securities ofNewco. None of the 6 limited partnerships that constitute Group 1 will hold 50%or more of the voting securities of Newco individually, thus, Newco has one UPEonly and the HSR filing for the acquisition of Target will be made by Group 2LP.
A related question arises in regardto a non-corporate entity currently owned by the limited partnerships of Group1. Back in early 2006, the 6 limited partnerships that make up Group 1 acquireda non-corporate target ("2006 Non-Corporate Target"). At the time, noHSR filing was required as none of the partnerships or individual investors inthe partnerships gained control of 2006 Non-Corporate Target by virtue ofhaving the right to 50% or more of the profits or 50% or more of the assetsupon dissolution of 2006 Non-Corporate Target. However, now the private equitycompany wishes to transfer 2006 Non-Corporate Target to become a subsidiary ofNewco. It seems to me that this is a reportable event, as Group 2 LP will nowcontrol 2006 Non-Corporate Target, whereas before it did not.
Thus, it seems two filings arerequired here, both by Group 2 LP -- one for the acquisition of the presenttarget, and another for the acquisition of control over 2006 Non-CorporateTarget.
I'd appreciate it if you'd let meknow if you agree with my initial analysis, and whether I seem to have providedall the facts necessary for a determination of HSR reportability.
[refer to imagefile for diagram details]