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Date
Rule
802.5
Staff
Janice C Johnson
Response/Comments


UPDATE: July 14, 2015 -- The below interpretation, as it relates to 802.5, is no longer the position of the PNO.  The PNO’s clarified position, found at "HSR Rule 802.5: the Investment Rental Property Exemption", supersedes all prior 802.5 interpretations, including those found in the Premerger Notification Practice Manual, 5th ed.

The will lease space on the communications towers to third parties, not entities included within the buyer. This transaction is exempt under 802.5 of the HSR Rules. M. Bruno concurs.

Question

From: (redacted)

Sent: Thursday, August 10, 2006 1:29 PM

To: Johnson, Janice C.

Cc: (redacted)

Subject: Exemption under Section 802.5

Dear Ms. Johnson,

We spoke on the telephone yesterday regarding the following fact situation which my client is facing: My client, which is a Massachusetts corporation (which has a United Kingdom corporation as its ultimate parent entity (the "UPE")) (the "Buyer") is acquiring the interests of a Delaware LLC (the "Target"). The Target owns or leases approximately 240 pieces of real estate in the U.S. on which are located communication towers. The Target leases space on such towers to cell phone companies, such as Sprint or Nextel. Neither the Target nor the Buyer is in the cell phone business. The Buyer, like the Target, will use the communication towers to lease space to third parties, such as Spring and Nextel. You advised me that this acquisition would be exempt from reporting under the HSR Act pursuant to 16 CFR Ch. 1, Section 802.5, which exempts acquisitions of investment rental property assets. You and I compared the above described fact pattern to the fact pattern in example #2 set forth in Section 802.5, which reads, in pertinent part, "'X' intends to buy from 'Y' a development commonly referred to as an industrial park. The industrial park contains a warehouse / distribution center, a retail tire and automobile parts store, an office building, and a small factory. The industrial park also contains several parcels of vacant land. If 'X' intends to acquire this industrial park as investment rental property, the acquisition will be exempt pursuant to Section 802.5. If, however, 'X' intends to use the factory for its own manufacturing operations, this exemption would be unavailable." We also discussed that the acquisition price of the target is approximately $135 million and that the UPE has $100 million (as adjusted) or more in annual net sales or total assets.

Please confirm by return email that the above accurately reflects the content of our telephone conference, or, in the alternative, advise me of any misstatement. Also, I asked if I or one of my partners might be able to call you to discuss this matter further. You told me that we could call you at your direct line which is (redacted).

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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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