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?