Sent:Friday, September 09, 2011 3:09 PM
To:Verne, B. Michael
Subject: HSR Reportability Question
Pleaseconfirm that the following proposed transaction would not require a filingunder the Hart-Scott-Rodino Act and/or let me know if you have any questions orcomments.
CompanyA currently holds 100% of the LLC membership interests ("interests")in LLC 1, and approximately 30% of the interests in LLC 2 and LLC 3,respectively. Company A has entered into a preliminary agreement to sell toBuyer all of its interests in these LLCs and the parties have agreed on thefollowing evaluations:
LLC1 $12 million
LLC3$200 million (all figures are approximate)
Thesales of LLC 1 and LLC 2 are conditioned on the sale of LLC 3, and Buyer currentlydoes not hold any interests in LLCs 1, 2 or 3.
Theacquisition of interests in LLCs is governed under the HSR Act in the firstinstance by 801.10(d), which provides that only the acquisition of 50% ormore of the interests in an unincorporated entity is reportable. Theacquisition of 100% of the interests in LLC ! is potentially reportable, butthe value does not meet the current minimum size of-transaction. Theacquisitions of the interests in LLC 2 and 3 are not reportable because theBuyer will not hold 50% or more of their respective interests as a result ofthe transaction.
Moreover,the amounts paid for LLC 2 and LLC 3 should not be aggregated with the anamount paid for LLC
1. 801.14(c) of the Rules provides that the value of all noncorporate interests ofthe acquired person which the acquiring person would hold as a result of theacquisition be determined by reference to 801.13(c). Section 801.13(c)(1)provides that previously acquired noncorporate interest in the sameunincorporated entity is to be aggregated with the newly acquiredinterests. Buyer has no previously acquired interests in any of the LLCs.
801.13(c)(2) provides that the acquisition of non corporate interests whichdoes not confer control of the unincorporated entity is not aggregated with anyother assets or voting securities which have been and are currently acquiredfrom the same acquired person. Thus, the consideration paid for the interestsin LLC 2 and LLC 3 would not be aggregated with the consideration paid for LLC1, and the minimum size of transaction would not be met.