1210005 Informal Interpretation

Date:
Rule:
802.21, 802.9
Staff:
Michael Verne
Response/Comments:

802.21 would not cover future acquisitions of the sub's stock, only the parent. Otherwise, two separate UPEs would be able to rely on the exemption. On the 802.9 question, we don't think having a director on the former parent's board or proposing any action to the former parent would disqualify a shareholder for using 802.9 in an acquisition of the spun off sub. K Walsh concurs.

Question

From:

(Redacted)

Sent:

Wednesday, October 03, 2012 11:42 AM

To:

Walsh, Kathryn; Verne, B, Michael; Berg, Karen E,

Subject:

Acquisitions after spin off

Helloall,

Ifound some relatively old interpretations stating that a pro-rata spin off of asubsidiary to existing shareholders is exempt under 802.10 and 7A(c)(10), butsubsequent acquisitions of the newly spun off subsidiary's voting securitieswould be separately subject to the HSR Act (see interpretation #9905007).Please let me know if that is not the current position of the PNO. I representShareholder S who filed HSR for a Parent entity at the $100 mm level within thepast five years, and exceeded such level during the first year. Parent plans tospin off its Subsidiary B pro-rata to existing shareholders. The value of theSubsidiary B voting securities to be received by Shareholder S is in excess of$68.2 million,

Basedon the interpretation, it is my understanding that, the spin off is exempt andShareholder S may continue to acquire Parent shares in reliance on thepreviously filed HSR. However, to acquire additional voting securities ofspun-off Subsidiary B Shareholder S must file HSR and observe the waitingperiod unless an exemption applies. Please confirm this is correct.

Wouldan investor be able to rely on 802.9 with respect to Subsidiary B if it was notable to rely on such exemption with respect to Parent because (i) it has adirector on the board of Parent or (ii) it proposed a course of action forParent requiring shareholder approval? What if the proposal was the spin-off ofSubsidiary B?

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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