PNO Guidance on Item 4(d)

Item 4(d) targets confidential information memoranda (CIMs), bankers’ books and other third party consultants’ materials, and synergies documents. 

When gathering materials responsive to Item 4(d), remember:

  • Documents responsive to Items 4(d)(i) and 4(d)(ii) must relate to “the acquisition” as in Item 4(c), because the phrase “specifically relate[d] to the sale of the acquired entity(s) or assets” in Items 4(d)(i) and 4(d)(ii) conveys the same concept.
  • The identification of relevant officers and directors in Items 4(d)(i) and (ii) limits the search for 4(d) documents to those individuals involved in the acquisition.  It is those individuals who have been identified for the Item 4(c) search who will have responsive Item 4(d) materials.
  • If a document is responsive to Items 4(d)(i) or 4(d)(ii) but is older than one year, it may still be responsive to Item 4(c), which has no time limitation.
  • Many of the long-standing, informal interpretations that apply to Item 4(c) will also apply to Item 4(d).  For instance, only the final draft of a document must be submitted.  For guidance on a specific interpretation, contact the PNO.

Specific Guidance

4(d)(i)

  • If there is a CIM for a given transaction drafted within the last year, the 4(d)(i) analysis ends there: provide the document.
    • If a seller created multiple CIMs for an array of bidders, Item 4(d)(i) requires only the CIM created for the actual buyer. 
    • If the seller created a CIM, but it was not given to the actual buyer, the seller still needs to submit the CIM.
    • If a CIM is created for a deal, and the deal is tabled for a time, but then comes back to life within a year, submit the CIM.  The “clean break” analysis does not apply within the one year time frame of Item 4(d)(i).
    • A CIM created solely for the purpose of discussing financing is not the type of CIM captured by Item 4(d)(i).
  • If there is no CIM, the question becomes whether the seller gave the buyer a document that was specifically intended to serve the purpose of a CIM.
    • This does not mean every item given to the buyer in the course of due diligence or in the data room, but instead focuses on the simple question of whether any one document given to the buyer was specifically intended by the seller to serve the purpose of a CIM.  For instance, a series of presentations given at an all-day meeting covering all the areas laid out in a CIM is not responsive to Item 4(d)(i), but may be responsive to Item 4(c).

4(d)(ii)

  • Item 4(d)(ii) targets documents created during the time when a transaction is planned but no firm acquisition has yet taken shape.  Bankers’ books or “pitch books” are a common kind of document that would be responsive to Item 4(d)(ii), assuming they meet the other requirements of this item.  But other kinds of documents can also qualify as responsive to Item 4(d)(ii).  For instance, if a company hires an investment bank or other consultant and asks that hired firm to prepare a list of proposed options for the company, this document would be responsive if it meets the other requirements of Item 4(d)(ii). 
  • Item 4(d)(ii) does not require a separate search of all third parties, such as investment bankers or law firms, involved in a given transaction. 

4(d)(iii)

  • If synergies documents are not in the files of any Item 4(c) custodians, there will be no responsive documents to Item 4(d)(iii).
  • A document solely referencing tax synergies is not responsive to Item 4(d)(iii) because these synergies are not merger-specific.  If a document references tax synergies as well as merger-specific synergies, it is responsive to Item 4(d)(iii).  A document referencing tax synergies may also be responsive to Item 4(c), depending on its content.
  • A financial model without stated assumptions is not responsive to Item 4(d)(iii).  The document must contain narrative explaining the stated assumptions, so if, for example, the assumption is “EBITDA times 3,” the document is not responsive unless there is an explanation of why that assumption has been made.
  • If a document makes a reference to synergies with no quantified dollar amount attached (e.g., the deal will result in synergies) this is not enough to make a document responsive to Item 4(d)(iii).
  • If Document A makes a reference to synergies with a quantified dollar amount attached (e.g., the deal will result in $40 million in synergies) this may be enough to make a document responsive to Item 4(d)(iii).  If there is a Document B from which the information in Document A is drawn and Document B is being submitted in response to Item 4(d)(iii), there is no need to submit Document A.  If there is no such Document B, then Document A must be submitted in response to Item 4(d)(iii). 
  • If a series of emails discusses input into the final version of a substantive synergies document, the emails are not responsive to Item 4(d)(iii) as long as the substantive synergies document is submitted in response to Item 4(d)(iii).

Tips for filing out the HSR Form

  • If a document is responsive to both Items 4(c) and 4(d), list it only once in Item 4(c) or Item 4(d). 
  • The number generated by the electronic form for an attachment has no bearing on the number assigned to Item 4(c) and Item 4(d) documents.  The first Item 4(c) document should be labeled 4(c)-1, even if the form assigns attachment number 3 to it.
  • Items responsive to Item 4(d) should be labeled 4(d)-1, 4(d)-2, etc.  There is no need to include the subparts of Item 4(d) in labeling documents.
  • If a portion of a document responsive to Item 4(d) is withheld or redacted on the basis of privilege, provide a privilege log that conforms with 16 CFR 803.3(d).