1011005 Informal Interpretation

Date:
Rule:
801.11(e), 802.51
Staff:
Michael Verne
Response/Comments:

Agree.

Question

From: (Redacted)
Sent: Tuesday, November 02, 2010 5:29 PM
To: Verne, B. Michael

Subject: HSR Question Regarding 801.11(e)

Dear Mike,

I would like to confirm that the proposed transaction described below is not reportable under the Hart-Scott-Rodino Antitrust Improvements Acts of 1976, as amended ("HSR Act") .

Buyer directly will acquire all of the equity interests of each of 3 separate entities all of which are controlled subsidiaries of Seller. One of the subsidiaries is a United States LLC ("US Sub"). The other two subsidiaries ("Foreign Subs") are foreign issuers that in aggregate hold less than $63.4 million in U.S. assets and in aggregate had less than $63.4 million in sales in or into the United States during the most recently completed fiscal year, and accordingly the acquisition of Foreign Subs is an HSR Act exempt part of the proposed transaction under 802.51.

Please assume for purposes of this hypothetical that the value of the US Sub exceeds $63.4 million (but is less than $253.7 million), so that the transaction only is reportable if the HSR Size of the Parties Test also is met.

Buyer is its own ultimate parent and does not have a regularly prepared balance sheet. Under 801.11(e), Buyer will prepare a pro forma balance sheet to determine whether the Size of the Parties Test is met.

Am I correct that in preparing this pro forma balance sheet Buyer may exclude cash that will be used to acquire the Foreign Subs and for expenses incidental to the acquisition of those subsidiaries along with the cash to acquire US Sub and for expenses incidental to the acquisition of that subsidiary? Please also assume that if cash to acquire the Foreign Subs and for expenses incidental to the acquisition of those subsidiaries is excluded from the pro form balance sheet then the Size of the Parties Test is not met, but if this cash had to be included in the pro forma balance sheet then the Size of Parties Test would be met.

Based on my reading of 801.11(e)(ii), Buyer may subtract all the cash to make the transaction and for incidental expenses, regardless of whether some of that cash is attributable to the HSR exempt aspects of the transaction. This conclusion also is consistent with Informal HSR Question Regarding 801.11 (e) Staff Opinion 0910010.

Please confirm my understanding is correct and that the proposed transaction is not reportable under the HSR Act.

About Informal Interpretations

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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