1104007 Informal Interpretation

Michael Verne



Sent: Tuesday, April 19, 2011 3:14PM
To: Verne, B.Michael
Cc: (Redacted)

Subject: HSR question


I have a question I hope you can answer:

Company A will acquire 100% of the LLC interestsof B LLC. Assume the size of the parties meets the HSR threshold.

Company A now holds a warrant topurchase 35% of the interests of B LLC for $100 but holds no LLC interestspresently.

Pursuant to a commercial agreement betweenCompany A and B LLC, Company A has the right to purchase all of the interestsof B LLC. Under the commercial agreement and ancillary agreements, theacquisition price for 100% of B LLC's interests will be $100 per customer of Bat the time of closing, less 35% to account for Company A's warrant. As aresult, Company A will pay less than $66 million for 100% of B LLC.

Please confirm or correct thefollowing analysis:

Under 801.10(d), the value of the LLC interests to beacquired is the acquisition price of the interests (if determined); ifundetermined, the fair market value. The acquisition price here is $100 percustomer, less 35%. This calculation will result in a specific dollar figurethat all parties will agree is the price. Therefore, the acquisition price isdetermined. Because the acquisition price is determined and because Company Adoes not presently hold LLC interests in Company B, the fair market value ofthe LLC interests to be acquired is irrelevant to the determination oftransaction value. The transaction value will be the acquisition price ($65 *number of customers).

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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