Question
From:(Redacted)
Sent: Tuesday, November 24, 2009 11:30 AM
To: Verne, B. Michael
Cc: (Redacted)
Subject: HSRanalysis question
Good morningMike.
Would you pleaselet us know whether you agree with the following analysis?
Company A andCompany B meet the size of parties thresholds under the HSR. Company B is anLLC controlled by a husband+wife UPE. Company A plans to acquire 100% of LLCinterests of Company B for approximately $187.5 million through the followingacquisitions that will occur at the same time:
An acquisition of a controlling (just over 50%) LLCinterest in Company B from a husband+wife UPE;
An acquisition of all the shares of a C Corp (notcontrolled by a husband+ wife UPE) whose sale
asset is a noncontrolling (41%) LLC interest in Company B; and
Acquisitions of the remaining noncontrolling LLCinterests from two individual unrelated holders.
Only the firstacquisition would be reportable under the HSR. The acquisition of C corp'sshares would be exempt under 802.4, because its sale asset is an HSR exemptminority interest in the LLC. The two acquisitions from minority holders wouldbe exempt as acquisitions of noncontrolling LLC interests. Do you agree?
While all thetransactions will occur simultaneously, the reportable value of the transactionseems to depend on the order of the individual purchases. If Company A acquiresthe controlling LLC interest first, it would pay the filing fee based on theportion of the total purchase price attributable to that controlling interest.Its subsequent acquisitions of
the remaining,noncontrolling LLC interests in Company B would be exempt under 802.30.
However, ifCompany A acquires the noncontrolling interests first (these acquisitions wouldbe exempt), and then acquires the controlling interest, it would have toaggregate the value of all interests held as a result of the last acquisition under801.10(d) and pay the filing fee based on the entire purchase price.
Given that allthe transactions will occur simultaneously, are the companies free to order theacquisitions in such a way as to have the acquisition of the controlling LLCinterest occur first and determine the filing fee accordingly (i.e. based onthe portion of the total purchase price attributable to that controllinginterest)? There would be an HSR filing in any event; the only issue is thefiling fee amount.