Question
From:(Redacted)
Sent: Tuesday, November 02, 20105:29 PM
To: Verne,B. Michael
Subject: HSR Question Regarding 801.11(e)
Dear Mike,
I would like to confirm that the proposedtransaction described below is not reportable under the Hart-Scott-RodinoAntitrust Improvements Acts of 1976, as amended ("HSR Act") .
Buyer directly will acquire all of theequity interests of each of 3 separate entities all of which are controlledsubsidiaries of Seller. One of the subsidiaries is a United States LLC("US Sub"). The other two subsidiaries ("Foreign Subs") areforeign issuers that in aggregate hold less than $63.4 million in U.S. assetsand in aggregate had less than $63.4 million in sales in or into the UnitedStates during the most recently completed fiscal year, and accordingly theacquisition of Foreign Subs is an HSR Act exempt part of the proposedtransaction under 802.51.
Please assume for purposes of thishypothetical that the value of the US Sub exceeds $63.4 million (but is lessthan $253.7 million), so that the transaction only is reportable if the HSRSize of the Parties Test also is met.
Buyer is its own ultimate parent anddoes not have a regularly prepared balance sheet. Under 801.11(e), Buyer willprepare a pro forma balance sheet to determine whether the Size of the PartiesTest is met.
Am I correct that in preparing this proforma balance sheet Buyer may exclude cash that will be used to acquire theForeign Subs and for expenses incidental to the acquisition of thosesubsidiaries along with the cash to acquire US Sub and for expenses incidentalto the acquisition of that subsidiary? Please also assume that if cash toacquire the Foreign Subs and for expenses incidental to the acquisition ofthose subsidiaries is excluded from the pro form balance sheet then the Size ofthe Parties Test is not met, but if this cash had to be included in the proforma 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 incidentalexpenses, regardless of whether some of that cash is attributable to the HSRexempt aspects of the transaction. This conclusion also is consistent withInformal HSR Question Regarding 801.11 (e) Staff Opinion 0910010.
Please confirm my understanding iscorrect and that the proposed transaction is not reportable under the HSR Act.