Question
October 8, 1991
Patrick Sharpe
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th & Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580
Re: Section 802.30 and 802.52
Dear Mr. Sharpe:
A few weeks ago, I talked with you about the interpretation of various statements in the Statement of Basis and Purpose with respect to Section 802.52 of the regulations promulgated under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Our conclusion was that the transaction as proposed was exempt under Section 802.52. I am including a more detailed description of the proposed transaction for your confirmation.
Corporation X is a company organized under the laws of (redacted) Its voting securities are owned 50% by Corporation B and 50% by Corporation C. Corporation B owns all of the voting securities of Corporation C. Corporation A owns all of the voting securities of Corporation B. Corporation A does not have any voting securities, but is controlled by a (redacted) in that the (redacted) has the right to 50% or more of the profits of Corporation A and 50% or more of the assets of Corporation A upon liquidation. The (redacted) also owns non-voting securities of Corporation X. The following chart depicts these ownership/control relationships:
[note 1]- [note 2]-[note 3]-[note 4]
While Corporation AX is organized under the laws of (redacted) Corporation A, Corporation B and Corporation C are each organized under the laws of the (redacted). An unrelated (redacted) company is proposing to acquire Corporation X, either by acquiring Corporation Xs voting securities from Corporation B from Corporation A. The buyer will also acquire the non-voting securities of Corporation X.
Corporation X has U.S. subsidiaries with assets and operations in the U.S. Prior to consummating the sale of Corporation X, it is expected that one of two transactions will occur. Either certain U.S. assets of these U.S. subsidiaries having a total value of more than $15 million will be transferred to a company whose voting securities will be owned, directly or indirectly, by Corporation A, or the voting securities of certain of these U.S. subsidiaries will be transferred to a company whose voting securities will be owned, directly or indirectly, by Corporation a. In either case, the transfer should be exempt under Section 802.30 in that the acquiring person and the acquired person both will be Corporation A by reason of holdings of voting securities.
Likewise, the sale of Corporation X should be exempt under 802.52 because (1) the (redacted) controls Corporation A, the ultimate parent entity, and (2) the acquisition will be of the voting securities of either Corporation X, a corporation organized under the laws of (redacted) or Corporation B, a corporation organized under the laws of the (redacted). Under my interpretation of section 802.52, the exemption should be available both with respect to acquisitions of issuers organized under the laws of (redacted) as well as acquisitions of issuers organized under the laws of the (redacted) if the (redacted) controls the ultimate parent entity.
Please review the facts and analysis stated in this letter and contact me to let me know if you are in agreement with my analysis. Let me thank you in advance for your corporation.
Very truly yours,
(redacted)
(redacted)