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Date
Rule
802.4, 802.30
Staff
Michael Verne
Response/Comments
1) Agree 2) Agree 3) No -A's acquisition of B is not exempt because you look at 802.30 going into the transaction. X is an acquired person at that point, but not an acquiring person because A is its own UPE.

Question

From: (Redacted)
Sent: Tuesday, June 29, 20108:09 PM
To: Verne, B. Michael

Subject: 7A(c)(10) and 802.30 Issue

Mike,

I am writing to seek your view on theapplicability of the HSR Act to the following transaction:

Company A is a publicly traded specialpurpose acquisition company (SPAC) and its only assets consist only of cash,cash equivalents and US treasuries. Company A is not newly-formed and hasregularly prepared financial statements. It is its own ultimate parent entity(UPE) and Funds X, Y and Z each own approximately 20% of the voting securitiesof Company A.

Company B is a publicly traded companywith substantial operating assets. Funds X, Y and Z own respectively,approximately 51 %, 10% and 4% of the voting securities of Company B.

Funds X, Y and Z plan to contributetheir shares of Company B to Company A in exchange for shares of Company A. Asa result, X, Y and Z will own respectively approximately 70%, 16%> and 8% ofthe voting securities of Company A.

My analysis of the transaction is asfollows:

1. Fund X's acquisition of voting securities of CompanyA is exempt under Rule 802.4 because the assets of Company A, following itsacquisition of more than 50% of the shares of Company B, will consist only ofassets the acquisition of which would be exempt under Rule 801.21 (cash, cashequivalents and treasuries) and Rule 802.30 (assets of Company B which isalready controlled by Fund X).

  • Funds Y and Z's acquisitions of voting securities of Company A are exempt under Section 7A(c)(1 0) because Y and Z's percentages of the voting securities of Company A will decrease as a result of the transaction.
  • Finally, is Company A's acquisition of control of Company B exempt under Rule 802.30 since Fund X is both the acquired person (as the UPE of Company B) and the post-acquisition UPE of Company A, even though Fund X is not the pre-acquisition UPE of Company A?

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