8304007 Informal Interpretation

Date:
Rule:
801.11
Staff:
Sandra Vidas

Question

(redacted)

April 22nd 1983

Sandra Vides, Esq.
Premerger Notification Office
Bureau of Competition
Room 303
Federal Trade Commission
Washington, D.C. 20580

Dear Sandra:

I am writing to confirm our telephone conversation

of Monday, April 16, 1983, in which I described a proposed

transaction, and we discussed the applications of the Hart-

Scott-Rodino premerger notification reporting requirements.

I would appreciate it if you would advise me if this letter

fails to reflect our discussion and conclusion accurately.

The fact are as follows: A corporation, X, is

held by two individuals, A and B, each of whom owns 50% of

Xs common stock. Corporation X plans to sell assets worth

approximately $43 million (the Assets) to Partnership No. 1,

in which individuals A and C are equal partners. Partnership

No. 1 presently has no assets and will finance the proposed

acquisition through borrowing that will occur contemporaneously

with acquisition. In addition, individuals A and C are

also equal partners in another partnership, Partnership No, 2,

which has assets worth approximately $30 million. At some

time in the future, Partnership No. 2 may acquire the Assets

from Partnership No. 1.

On the basis of these facts, you advised me that no

premerger notification report would be required for the

following reasons: A partnership is treated as its own ultimate

parent entity. The acquisition of the Assets by Partnership

No. 1 from Corporation X is not reportable because Partner-

ship No. 1 does not meet the size-of-person test, but

rather go to the size of the transaction.

Further, the possible subsequent acquisition of the

Assets by Partnership No. 2 would not be reportable because

the persons involved would not meet the size-of-person test

(Partnership No. 1 having approximately $43 million in assets

and Partnership No. 2 having approximately $30 million in

assets). Thus, as long as the use of tow partnership was

necessary for reasons other than avoidance of the premerger

notification reporting requirements, no premerger reports

would be required.

If, however, Corporation X sold the Assets directly

to Partnership No. 2, a premerger notification report would

be required unless an exemption were available, since the

size-of-person and size-of-transaction tests would be satisfied.

I appreciate your advice and assistance on this

matter.

Sincerely,

(Redacted)

 

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