Question
(redacted)
Mr. Joseph Price
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Avenue, NW, Room 303
Washington, D.C. 20580
Re:
Dear Mr. Price:
Confirming our conversation yesterday and this morning, we represent an entity with sales or assets substantially in excess of $100,000,000 which intends to sell substantially all of the assets of two indirectly but wholly-owned subsidiaries to another entity with sales or assets substantially in excess of $100,00,000. The purchase price will be $14,000,000. In addition, the purchaser will assume rights and duties under various equipment leases with remaining payment obligation in excess of $1,000,000.
While the assets in question are more than 15% of the assets of the particular subsidiaries, they represent less than 15% of the assets of the Ultimate Parent Entity. Accordingly, the Size of Transaction Test for reporting the transaction under Section 7A of te Clayton Act will be satisfied only if the fair market value of the assets to be acquired is deemed to $15,000,000 or more.
In reliance on our telephone conversations, I have advised my client that it need treat the entire amount of the remaining equipment lease payments as an assumed liability which must be added to the cash purchase price to determine if the $15,000,000 threshold is met. Rather, only the amount, if any, by which the lease payment obligation exceeds the value of the leased equipment, need be aggregated with the purchase price.
Accordingly, the transaction is reportable only if the Board of Directors of the Acquiring Entity determines in good faith within 60 days of the closing date on the transaction that the fair market value of the assets it to acquire exceeds $15,000,000 or that the aggregate amount of payments to be made under the equipment leases exceeds by $1,000,000 or more the fair market rental value of the equipment. We do not anticipate that either occurrence is likely.
The client plans to consummate the sale in the very near future. Therefore, I would appreciate a call at your earliest convenience confirming that the planned transaction, under the facts described in this letter, is not subject to the premerger notification and waiting requirements of Section 7A of the Clayton Act.
Once again, thank you for your prompt and helpful assistance in this letter.
Best wishes,
Yours truly,
(redacted)
cc: (redacted)