Question
(redacted)
August 27, 1998
Ms. Nancy Ovuka
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th and Pennsylvania Avenue, NW
Washington, D.C. 20580
Re: Hart-Scott-Rodino Antitrust Improvements Act
Dear Ms. Ovuka:
You and I spoke by telephone on Friday afternoon, August 21, 1998. This letter memorializes our conversation.
I described the following situation and asked you for you view as a Premerger Office staff member with regard to the need to report this transaction under the hart-Scott-Rodino Antitrust Improvements Act (the "Act")
Two natural persons, UPE1 and UPE2 are siblings and each owns 50 % of the voting stock of the parent company of a corporate group. Both UPE1 and UPE2 have total assets in excess of $100 million. the corporate group of which they are both ultimate parent entities has total assets in excess of $200 million. The ownership structure can be pictured by the following diagram in which the percentages listed are the percentage ownership of voting stock.
(graph) [note 1]
UPE1 and UPE2 plan to split up the single family of corporations into two separately and wholly-owned groups by exchanging voting and non-voting securities so that each will end up with 100% of the voting stock and substantial amounts of the non-voting stock of his or her own separate corporate group but no voting or non-voting stock in the other's corporate group. After the planned split-up, the structure will look like the following diagram;
(graph) [note 1]
It is my view, and you concurred on Friday, that while this transaction would not be exempt under 16 O.F.R. 802.30 (intraperson transaction), it would be exempt under 7A(c)(3) of the Act. In this regard the structure, and the proposed split-up, are similar to the wrapping up of a corporate joint venture in which 50-50 corporate joint ventures either split-up the joint venture or one venturer acquires the other's entire interest in the joint venture. In either case, this transaction is viewed by the Premerger staff to be exempt under 7A(c)(3). While in the case I have described UPE1and UPE2 are natural persons and not corporations, the analysis is essentially the same.
If I have misstated in any way the advice I received, or if the facts I have presented are different from those you understood when we talked on Friday and those differences change your conclusion, please contact me at your earliest convenience.
Sincerely,
(redacted)
cc: (redacted)