1102007 Informal Interpretation

Date:
Rule:
801.2
Staff:
Michael Verne
Response/Comments:

  - Yes -the acquisition by E of X, Y and Z is separately reportable. You are correct that if the spinoff occurs pre-acquisition by A, B is the acquired UPE. If the spinoff occurs post acquisition, A is the acquired UPE.

Question

From:

(Redacted)

Sent:

Wednesday, February 16, 2011 12:38 PM

To:

Verne, B. Michael

Cc:

(Redacted)

Subject: HSR question

Mike,

I am working on the followingtransaction:

"A" proposes to acquire"B" for more than $2 billion in cash. B is its own ultimate parententity.

At the closing, and simultaneously withthe acquisition of B, three of B's existing businesses (which will likely betransferred to separate subsidiaries of B prior to the closing) ("X,""Y" and "Z") will be spun-off (i.e., sold) to members ofB's current management (most likely to an entity formed by management to makethe acquisition ("E")), for approximately $500 MM as follows:

100% of X will be sold to E. A willsupply low cost financing to E for the purchase of X.

70% of Y will be sold to E. A willcapitalize Y with working capital of approximately $37.5 MM.

85% of Z will be sold to E. A willcapitalize Z with working capital of approximately $37.5 MM and forgive Z'snote in the amount of $20 MM.

Assuming that the relevant thresholdsare met, and that an HSR filing will be made by A for the acquisition of B,

will an HSR filing be required inconnection with the spin-off of X, Y and Z to E?

If the answer is yes, how should we determinewho should file as the acquired person in connection with the spinofftransaction? Am I correct that the answer turns on whether beneficial ownershipof B passes to A prior to the spin-off of X,Y and Z?

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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