Question
VIA E-MAIL -hsr-Ietters@ftc.gov
Premerger Notification Office
Bureau of Competition, Room 303
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Ladies and Gentlemen:
The purpose of this letter is toconfirm advice provided by Michael Verne of the FTC by telephone on April 14,2009.
Our client is a Delaware corporation("A"). A manages, but does not control for HSR purposes, three othercompanies, "B," "C," and "D." Companies A, B, Cand D desire to combine and be jointly owned and operated.
To accomplish this proposedcombination, a new Delaware corporation is being formed, Newco, Inc.("Newco"), which initially will be wholly owned by A. In addition,four wholly owned subsidiaries of Newco are being formed: A Sub, B Sub, C Suband D Sub. A will merge with A Sub in a forward triangular merger, with A beingthe surviving entity. Shareholders of A will receive Newco shares in exchangefor their A shares and together will own more than 60% of the equity ownershipof Newco.
In addition, simultaneously withthe merger between A and A Sub, B will merge with B Sub in a reverse merger,with B being the surviving entity. Members of B will receive Newco shares inexchange for their B units.
Further, two asset acquisitionswith C and D will be completed simultaneously with the mergers between A and ASub and B and B Sub. C Sub will purchase the assets of C through the issuanceof Newco shares to C. Likewise, D Sub will purchase the assets of D through theissuance of Newco shares to D. The Newco shares ultimately will be distributedby C and D, respectively, to their members.
For HSR purposes, it appears thetransaction should be viewed as a consolidation pursuant to Section801.2(d)(2)(iii) of the Rules. Accordingly, each of A, B, C and D is viewed asboth an acquiring and an acquired person, and each is deemed to be acquiring allof the voting securities of each of the others. The size-of-the-transactiontest would be applied to each of the transactions involving A, B, C and D todetermine if any of such transactions exceeds $65.2 million in size (with eachviewed separately and not on an aggregated basis). If so, a filing or filingswould be made for such transaction or transactions, but pursuant to Section803.9(b) of the Rules, only one transaction fee would be paid, with the amountto be based on the greatest of the transaction sizes.
Please confirm the applicabilityof Sections 801.2(d)(2)(iii) and 803.9(b) to this transaction.
In addition, we understand theacquisition of Newco shares by the shareholders of A, B, C and D also will needto be analyzed and filings made if the size-of-the-parties test and thesize-of-the-transactions test are met and no exemptions apply.
Should you need any additionalinformation, please do not hesitate to contact me. Thanks.