Skip to main content
Date
Rule
802.30
Staff
Michael Verne
Response/Comments
This is not exempt under 802.30, 802.30(a) reads - (a) An acquisition ... in which the acquiring and at least one of the acquired persons are, the same person by reason of §801.1(b)(1) of this chapter 801.1(b)(1) defines control through -holding 50 percent or more of the outstanding voting securities of an issuer -which Sub 1 does not hold in Sub 2 Company is the UPE of Sub 1 through the holding of 100% of its voting securities, but it is indirectly the UPE of Sub 2 under 801.1(b)(2) -having the contractual power presently to designate 50 percent or more of the directors of a for-profit or not-for-profit corporation -so the merger of Sub 2 into Company (the acquiring person) is not exempt under 802.30, because Sub 2 is its own UPE and the sole acquired person. K Walsh concurs.

Question

From:

(redacted)

Sent:

Wednesday, April 11, 2012 10:47 AM

To:

Verne, B. Michael

Subject:

802.30 Question

Mike-

Iwould be very grateful for your thoughts on the transaction described below.

Company,a Foreign Entity that is its own Ultimate Parent Entity ("UPE"), owns100% of the voting securities of Sub1, which in turn owns approximately 40% ofthe voting securities of Sub2. Sub1 and Sub2 are Foreign Issuers.

Pleaseassume for the purposes of this analysis that Sub1 and Sub2 together made inexcess of $68.2 million in sales into the United States in the most recentlycompleted fiscal year.

Threeyears ago, Sub2 was failing, and Sub1 was appointed by court order in itsnative jurisdiction as the strategic investor in Sub2, and was granted theright to acquire certain voting securities of Sub2 and also to appoint fourdirectors to Sub2.

Accordingto Sub2's articles of association / charter documents, Sub2's board ofdirectors may have no fewer than 3 and no more than 12 members. Sub2's board ofdirectors currently comprises 7 members, of which Sub1 has appointed 3 memberspursuant to the court order. Sub 1, also pursuant to the court order, has theunrestricted ability at present to appoint a fourth director, therebyincreasing the size of the board to eight members, of which half would beappointed by Sub1. No other entity has the ability to appoint additionaldirectors or to expand the size of the board. Other than the unilateralauthority of Sub1 to increase the size of the board by appointing an additionaldirector, the size of the board may be increased only by a majority resolutionpassed by Sub2's board of directors or if put to and passed by majorityshareholder vote at a General Meeting of the shareholders pursuant to thearticles of association / charter documents. No shareholder of Sub2 has thepresent ability to vote 50% or more of the shares of Sub2.

Companywishes to undertake a reorganization merging each of Sub1 and Sub2 intoCompany, so that Company survives with no subsidiaries. Shareholders of Sub2will receive voting securities of Company in exchange for their votingsecurities of Sub2 at a fixed exchange ratio. No shareholder of Sub2 will holdas a result of the mergers, voting securities of Company valued in excess of$68.2 million.

Basedon these facts, we would conclude that Company is the UPE of both Sub1 andSub2, and that the merger of Sub1 and Sub2 into Company is an IntrapersonTransaction exempt from the reporting requirements of the HSR Act pursuant to16 C.F.R. 802.30. Please let me know if you agree, or if you need anyadditional information.

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.

Learn more about Informal Interpretations.

Return to top