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Date
Rule
801.1(c); 802.30
Staff
Victor Cohen
Response/Comments
An irrevocable proxy to vote shares does not, by itself constitute beneficial ownership of the shares & thus, the holder of the proxy does not hold these shares even though they must be aggregated with shares the person does hold to determine if this person is in control of an issuer.

Question

April 12, 1994

VIA TELECOPIER

Victor Cohen, Esq.
Federal Trade Commission
Bureau of Competition
Premerger Notification Office
Sixth Street and Pennsylvania Ave., N.W.
Washington, D.C. 20580

Dear Mr. Cohen:

This letter replaces my letter to you dated April 8, 1994 and is confirmatory of a telephone conversation among yourself, (redacted) and me on March 8, 1994. In that conversation, I described to you the following factual situation:

There are 17.2 million outstanding shares of Issuer
Is only class of voting securities. The principal
holders of Is stock (directly or through the
intermediaries described below) are Company A, 
Mr. B, and Company C.

Company A directly owns 1.2 million shares of Is
stock. A also owns 50% of the voting securities of
Company J and is therefore an ultimate parent entity
of J. Mr. B is the other ultimate parent entity of J.

J owns 50% of Partnership P. Company C owns the
other 50% of P.

P owns 7 million shares of Is stock, which for HSR
purposes are attributed to C through P and also
attributed to A and B through P and J.

Separately, C holds irrevocable proxies to vote 3.3
million shares of Is stock. (Note that P does not
hold these proxies.)

C and J have a voting rights agreement in
connection with their joint ownership of P. Under
the voting rights agreement, C promises to vote its
proxies in the same manner as J and C jointly
determine to vote the shares of Is stock that are
owned by P.

We asked you whether the Premerger Notification Office would view any of A, B or C as an ultimate parent of I.

You advised us that C is an ultimate parent entity of I because (i) the 3.3 million shares as to which C holds irrevocable proxies must be aggregated with the 7 million shares that C holds through P, and (ii) 7 million shares plus 3.3 million shares constitute more than half of Is voting securities. See Premerger Notification Practice Manual, Interpretation #65. You also said the staffs view is that C does not hold the proxy shares within the meaning of 16 C.F.R. 801.1(c) and therefore that Cs control of I does not enable C to rely on the intraperson exemption of 16 C.F.R. 802.30 in connection with Cs acquisition of any additional voting securities of I. Cf. Premerger Notification Practice Manual, Interpretation #74.

You further stated (i) that A is not an ultimate parent entity of I, because A holds less than 50% of Is voting securities (1.2 million plus 7 million shares), and (ii) that B is not an ultimate parent entity of I, because B holds less than 50% of Is voting securities (7 million shares). You indicated that the voting rights agreement between J and C does not create a factual situation that would cause the proxy shares to be imputed to A and B for HSR purposes.

If the foregoing account of our conversation is inaccurate in any way, or if you believe that it misstates the views of the Premerger Notification Office, please let me know immediately. Unless we hear from you to the contrary, (redacted) and I will continue to advise our clients in accordance with the analysis set forth in the two immediately preceding paragraphs. Thank you for you attention to this matter.

Very truly yours,

(redacted)

(redacted)

STAFF COMMENTS: An irrevocable proxy to vote shares does not, by itself constitute beneficial ownership of the shares & thus, the holder of the proxy does not hold these shares even though they must be aggregated with shares the person does hold to determine if this person is in control of an issuer.

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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.

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