Yes, you would include the cash. The parties are adjusting the purchase price to $72 million because they didn't take the cash on hand into account when they agreed on $70 million. M Verne concurs.
From: Johnson, Janice C
Sent: Friday, November 22, 2013 3:44 PM
(Redacted), in discussions with other staff, I've come up with a different response:
Yes, you would include the cash. The parties are adjusting the purchase price to $72 million because they didn't take the cash on hand into account when they agreed on $70 million.
Sent: Friday, November 22, 2013 1:02PM
To: Johnson, Janice C.
Many thanks for taking the time to speak with me today. This email contains the hypothetical we discussed.
Company Y is purchasing all the equity of Company X. The purchase price, as set forth in the relevant agreement, is $70 million.
The parties are not sure at this point of the amount of cash that Company X will have at the time of closing. Company X intends to leave that undetermined amount in the Company rather than distribute it prior to closing. Company Y agrees to reimburse Company X the amount of cash at closing.
It is my understanding that the "swapped" cash will NOT be included in the valuation for HSR purposes. That is to say that if $2 million in cash is swapped, the transaction value for HSR purposes does not become $72 million but rather remains at $70 million.