1202005 Informal Interpretation

Date:
Rule:
801.50
Staff:
Michael Verne
Response/Comments:

  – Agree.

Question

From: (Redacted)
Sent: Monday, February 13, 2012 6:15PM
To: Verne,B. Michael
Subject: Consolidation v. Formation Question

Mike

I hope that you are doingwell. I would appreciate your assistance with an HSR question. If you need anyadditional information, please let me know.

NEWCO LLC will be formed.

UPE1, an individual, controlsseveral LLCs. LLC-A and LLC-B are wholly owned, and LLC-C has a minority membernot related to UPE1. UPE1 will contribute 100% of LLC-B and the controllinginterest in LLC-C to NEWCO LLC in exchange for 78% of the membership in NEWCOLLC. UPE1 will retain ownership of LLC-A. The minority member of LLC-C willcontribute its minority interest in -LLC-C to NEWCO LLC in exchange for 2% ofthe membership in NEWCO LLC.

UPE2, also an individual,owns 100% of LLC-D. UPE2 will contribute 100% of LLC-D to NEWCO LLC in exchangefor 20% of the membership interest in NEWCO LLC.

Each of the entities tobe contributed to NEWCO LLC will remain as a subsidiary of NEWCO LLC.

We view this to be the formationof an LLC subject to 16 C.F.R. 801.50, and not as a consolidation as definedin 16 C.F.R. 801.2(d)(iii). As a result, UPE1 will have a filing obligationunder the HSR Act if the size-of-transaction and size-of-person tests asdescribed in 801.50 are met. However, UPE1 's acquisition of a controllinginterest in NEWCO LLC may be exempt under 16 C.F.R. 802.4 and 802.30(c) ifthe value of LLC-D is below $50 million, as adjusted.

UPE2 will have no filingobligation because it is not acquiring control of NEWCO LLC.

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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