Question
From: (Redacted)
Sent: Monday, June 07, 2010 3:40 PM
To: Verne,B. Michael
Cc: (Redacted)
Subject: 802.51/802.50 Question
Mike,
(Redacted) and I are working on a multi-step transactioninvolving foreign entities and assets, and we're hoping you can confirm ouranalysis that no HSR filings are required.
The transaction will occur in several steps,which are contingent upon one another and will occur approximatelysimultaneously. You can assume the size of persons thresholds are met.
1. Buyer (a US entity) will acquire approximately 63% ofTarget 1 (which is its own ultimate parent), via purchases of voting securitiesfrom existing Target 1 shareholders and from Target 1 itself, for a total ofapproximately $191 million. See HSR Analysis below.
2. Target 1 has several subsidiaries, among them Sub Aand (currently being formed) its subsidiary Sub B. Sub A is a foreigncorporation and Sub B will be a foreign corporation. Sub A currently holds 50%of Target 2. Sub A will acquire (from Seller, an entity outside the person ofBuyer/Target 1) the remaining 50% interest in Target 2. This is an intrapersontransaction and therefore exempt from HSR. (Sub B may then acquiresubstantially all the assets of Target 2; this too would be an intrapersontransaction.)
3. Sub B will acquire substantially all the assets ofTarget 3 (from Seller Sub, a controlled subsidiary of Seller) for a totalpurchase price of approximately $832 million (a combination of cash purchaseprice and the assumption of debt). See HSR Analysis below.
HSR ANALYSIS
A. Buyer's acquisition of 63% of Target1.
We believe Target 1 is a foreigncorporation. It was formed and organized under the laws of Bermuda. While ithas multiple global offices, we believe its principal offices are not withinthe US because: --It considers its principal offices to be in Bermuda.
--It has four officers (those whosepositions are identified in Target 1's bylaws or articles, or appointed by itsboard of directors): (i) the CEO/President, who maintains his office in the US,(ii) the VP/CFO/Non-Bermudian Secretary, who maintains his office in the UK,(iii) a VP who maintains his office in the UK, and (iv) a Secretary, whomaintains her office in Bermuda. --It has no other employees, but more than 50%of the employees of its group (including its controlled subsidiaries) arelocated outside the U.S.
--It is a holding company and thereforeits activities are limited to the election of directors of its controlledsubsidiaries and the formation of group policy; these activities are conductedat an annual meeting of shareholders that occurs in Bermuda and quarterlymeetings of the board of directors that occur outside the US. --The vast majority of Target 1's assets and revenues (on a consolidated basis with itssubsidiaries) are located outside the US.
Target 1, on a consolidated basis withits controlled subsidiaries, had less than $1 million in sales to the US in its most recent fiscal year. For these reasons, Buyer's acquisition of 63% of Target1 is exempt from notification under 802.51 (a) of the HSR Rules.
B. Buyer's acquisition (via Sub B, an entityto be controlled by Target 1) of substantially all the assets of Target 3.
The assets are marine cargo shippingcontainers. We believe they are "foreign" assets because,notwithstanding that some of the containers may be transitorily in the US when leased and being loaded, unloaded or shipped overland:
--Seller Sub (the entity selling theassets) is a Bermuda entity (formed, organized and principal office in Bermuda).
--The assets have no "homebase"; when not leased they are stored in a depot in whichever global portthey landed as a result of their last lease.
--The assets generated less than25% of their revenues for the last completed fiscal year from US customers.
Target 3's assets generated less than $5million in sales to US customers in the most recent fiscal year. For thesereasons, Buyer's acquisition of Target 3 is exempt from notification under802.50(a) of the HSR Rules.