Skip to main content
Date
Rule
7A
Staff
Alice Villavicencio
File Number
9805012
Response/Comments
Called writer on May 27, 1998 and (not legible) 1998 (not legible)

Question

One page Fax cover sheet

(redacted)

May 20, 1998

Alice Villavi Called writer on May 27, 1998 and (not legible) 1998 (not legible) cencio
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Avenue, NW, Room 303
Washington, D.C. 20580

Re: Size-of-the-Parities Test

Dear Alice:

Pursuant to your request during our phone conversation this afternoon, below is an outline of the hypothetical transaction I presented to you. As I mentioned to you on the phone, my only question is whether the size-of-the-Parties Test is met in the hypothetical.

Background:

  • Natural Person A (1,000,000 in assets) owns 50% of Corporation ($5,000,000 in assets).
  • Natural Person B ($5,000,000 in assets) owns 50% of Corporation ($5000,000 in assets) (i.e., "Person B' has $10,000,000 in assets in the aggregate).
  • Client has over $1000,000,000 in assets.

Hypothetical

1. A will purchase B's 50% interest in Corporation for a purchase price of $3,000,000. (A however, will not transfer funds to B yet.)

2. Immediately after the A and B transaction, Client will purchase A's 100% interest in the Corporation for a purchase price of $16,000,000. The payment of the purchase price will be as follows:

  • $8,000,000 wore transfer to A.
  • $8,000,000 wire transfer to B to satisfy the A/B transaction purchase price.

My specific question is whether the assets of "Person B" (i.e., the aggregate of B's assets and Corporation's assets) must be considered when determining whether the Size-of-the-Parties Test is met with respect to Client's acquisition of 100% of Corporation.

After you have considered the above hypothetical, please call me at (redacted). Thank you in advance for your assistance.

Sincerely, (redacted)

cc: (redacted)

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

Learn more about Informal Interpretations.