1206003 Informal Interpretation

Date:
Rule:
801.1(d)(2)
Staff:
Michael Verne
Response/Comments:

  – Agree – K Walsh concurs.

Question

From: (Redacted)
Sent: Thursday, June 14, 2012 10:34 AM
To: Verne, B. Michael
Subject: Associate question in context of corporate UPE

Mike,

Iwould like to confirm my understanding relating to the applicability of anassociates assessment for a corporate UPE.

Holdco,a corporation, will acquire shares of target, a US corporation, and thatacquisition will trigger HSR. Voting shares of Holdco are held 50/50 byInvestor A and Investor B. Investor A is a private equity company, and it holdsits stake in Holdco in three separate investment funds each of which is its ownUPE. Investor B is corporate entity, and it is the UPE of Holdco. Through ashareholder agreement, each of Investor A and B has the right to appoint halfof the board (which has an even number of board seats) of Holdco. This rightapplies collectively to the Investor A funds investing in Holdco, not to anyonefund or entity, so it is a right generally consistent with the Investor Avoting rights.

Thereis no separate agreement between Investor A, or any entities affiliated withInvestor A, and Holdco or Investor B giving Investor A the right to manageHoldco's investment decisions, and thus Investor A does not individually directHoldco's investment decisions. Instead, the investment decisions are managed byHoldco's board. It may be the case that the three funds affiliated withInvestor A are ultimately managed by the same top GP, but because no oneInvestor A GP entity has the right to manage Holdco's investments, I do notthink that any Investor A entity is an associate of Holdco. I believe thisconclusion is consistent with point 2 in the informal letter dated July 28,2011, and with the informal letter dated February 12, 2012. See http://www.ftc.gov/bc/hsr/informal/opinions/1107008.htmand http://www.ftc.gov/bc/hsr/informal/opinions/1202004.htm

Manythanks,

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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