Question
(redacted)
November 5, 1996
Victor L. Cohen, Esquire
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
Washington, D.C. 20580
Dear Mr. Cohen:
This letter confirms your advice to me earlier this week with respect to the appropriate application of the Hart-Scott-Rodino Antitrust Improvements Act and Rules to the transaction described below.
A owns a majority of the voting securities of B, and those securities constitute essentially all of As assets. C owns a minority of Bs voting securities. A and C agree to sell all of the voting securities of B to D. Prior to closing on Ds purchase of those securities, however, as a necessary condition to that closing and as reflected in an agreement among A, C and D, C will exercise an option it holds to acquire additional voting securities of B (through a conversion of debt to equity) sufficient to result in C then owning a majority of Bs securities and reducing As holding to minority status. D, at the closing on its purchase of B, will then acquire the majority of Bs securities from C and will at the same time acquire all of the outstanding voting securities of A, thereby obtaining ownership of the remaining shares of B.
Cs exercise of the above-mentioned option will occur no earlier than one day prior to the day of the closing on Ds acquisition of all of the voting securities of B. Cs resulting transitory ownership of the additional securities of B would occur only after expiration of the HSR waiting period applicable to Ds acquisition and only in contemplation of the certain closing of Ds acquisition no later than one day thereafter.
On the basis of the foregoing facts, you advised that it would be appropriate for A, C and D to deem all of the above-referenced steps as a single transaction for HSR purposes. Thus, D would file as the acquiring person and A would file as the ultimate parent of the acquired entity. All of the interim steps, including Cs exercise of its option, would be described in the item 2(a) description of the transaction. The treatment of this series of steps as a single transaction is consistent with and an appropriate application of the rationale described in interpretive letter no. 70 in the current edition of the Premerger Notification Practice Manual.
My thanks to you for your assistance of this matter.
Sincerely,
(redacted)