The PNO handles Hart-Scott-Rodino Premerger Notification Filings for well over a thousand transactions each year. When you submit an HSR Form with all the required information, the PNO can quickly review the filing, and if necessary, forward it to the investigative staff who will focus on determining whether the acquisition presents competitive issues that warrant further review.
But when filings contain mistakes, the PNO review process can get bogged down. In the worst case, mistakes can lead us to “bounce” a filing for deficiencies, and the initial HSR waiting period will not restart until they are fixed. Often, these deficiencies are easy to avoid. To help you avoid the most common filing mistakes (and avoid having a filing bounced), we have put together some basic tips to be discussed here and in future blog posts.
First up: affidavits and notice letters.
Let’s start with the basic affidavit for the most common type of deal: a consensual transaction (known in the premerger world as a non-801.30 transaction). Here, both parties to the transaction must submit an affidavit, and that affidavit must contain key language from Part 803.5(b) of the HSR Rules.
- The affidavit must state that a contract, agreement in principle, or letter of intent to merge or acquire has been executed. Parties often forget this key execution language, and this means they have not submitted a viable affidavit.
- The affidavit also must attest to the good faith intention of the person filing notification to complete the transaction.
For tender offers and acquisitions of voting securities from third parties (known as 801.30 transactions), only the buyer must submit an affidavit. Although the buyer does not need to include execution language in the affidavit (because there is often no agreement in principle with the seller), there are additional requirements for the buyer in an 801.30 transaction.
- The buyer’s affidavit must state its good faith intention to make the acquisition, and in the case of a tender offer it must also state that the intention to make the tender offer has been publicly announced. In all cases, the buyer also must state that it has sent notice to the target about the acquisition so that the target is aware of the acquisition and will comply with its own HSR filing obligation.
- As outlined in Part 803.5(a) of the HSR Rules, the notice letter to the target must provide specific information about the transaction. It is especially important that the notice letter be addressed to a particular person at the target to receive notice, such as the General Counsel. This same contact person will receive a notice letter from the PNO, and it is very helpful to have a phone and fax number for this person in case the PNO needs to be in contact. Without a valid contact at the target, the notice letters may not reach the right person, which often delays the submission of the target’s HSR filing and can result in unanswered questions about the competitive effects of the acquisition.
Next Up: Mistakes with attachments