1109016 Informal Interpretation

Michael Verne

– The change in structure has taken this out of 801,30. You can file on the
agreement with the shareholder of A/B and either can file on the behalf of
the issuer.


Sent:Friday, September 16, 2011 5:20 PM
To:Verne,B. Michael
Subject: RE: 801.30 Inquiry


Thanksagain for your earlier response. The parties are considering (for tax reasons)a somewhat different structure.

Inthis alternative model, Issuer's shareholders will still be the currentshareholders of Corporation A, the limited partners of Partnership X (which iscontrolled by Corporation A), and the shareholders of Corporation B. Theshareholders of Corporation A and Corporation B will still contribute theirshares, and the limited partners of Partnership X will still contribute theirinterests, in exchange for shares of Issuer. The difference is that instead ofbuying the shares of Issuer from Issuer's shareholders, Buyer will buy fromIssuer the shares of Corporation A and Corporation B and the limitedpartnership interests of Partnership X that Issuer's shareholders had contributed.

Technicallythis does not seem to be an 801.30 transaction because Buyer would be acquiringthe voting securities and noncorporate interests from an entity (Issuer)that is included within the same person (Issuer) as A, B, and X (all whollyowned by Issuer as of immediately before Closing). May the parties neverthelesstreat this as an 801.30 transaction? We note that if the parties were to skipthe Issuer-formation stage altogether, then Buyer would be acquiring shares ofA and the noncorporate interests of X from holders not included in the sameperson as A (which is its own UPE) and X (which is controlled by A).Consequently, it seems that we could give notice to A (as describedbelow), but with an explanation (as you recommended).

(Forcompleteness, if the Issuer-formation stage were skipped, the acquisition ofshares of B would be from an individual who holds 100% of the voting securitiesof B, but that transaction would not be reportable for size-of-transactionreasons.)

From:Verne, B. Michael [mailto:MVERNE@ftc.gov]
Sent:Tuesday, September 13, 2011 11:57 AM

Subject: RE: 801.30 Inquiry

I agree that 801.30(a)(5) would apply and that theentities you propose to notify will work. You may want to provide a briefexplanation in Item 3.

From: (Redacted)
Sent:Tuesday, September 13, 2011 12:36 PM
To:Verne,B. Michael
Subject: 801.30 Inquiry


Thanksfor the program yesterday afternoon. It was quite helpful. I have aquestion, though, that does not relate to the new form - it is an 801.30question.

Werepresent Buyer. Buyer intends to buy 100% of the voting securities of Issuer.Buyer's acquisition of those securities will be a reportable transaction.Issuer has not yet been formed, but it will be formed if a favorable taxdetermination is received from the IRS. When formed, Issuer will be its ownUPE.

Issuer'sshareholders will be the shareholders of Corporation A, the limited partners ofPartnership X (which is controlled by Corporation A), and the shareholders ofCorporation B. The shareholders of Corporation A and Corporation B willcontribute their shares, and the limited partners of Partnership X will contributetheir interests, in exchange for shares of Issuer. The formation of Issuerappears to be the formation of a joint venture corporation under 801.40,but it will not produce a reportable acquisition, because no person willacquire $66 million worth of voting securities.

Buyerhas negotiated a purchase agreement with the primary shareholders ofCorporations A and B. Some of the shareholders have signed the purchaseagreement. Others have signed a letter of intent in which they and Buyer agreeto sign the purchase agreement after the tax determination is received.

Althoughthe transaction has been negotiated, we believe that it is covered under801.30(a)(5) ("All acquisitions (other than mergers and consolidations) inwhich voting securities or non-corporate interests are to be acquired from aholder or holders other than the issuer or unincorporated entity or an entityincluded within the same person as the issuer or unincorporated entity")and that the parties should accordingly follow the procedures under 803.5(a).Assuming that the Buyer is prepared to execute the 803.5(a)(2) affidavit, we believethat it could provide notice and proceed with its filing today, but to whomshould it provide notice, given that the Issuer has not yet been formed?We think that Buyer should send the notice to the corporate headquarters ofCorporation A, Corporation B and Partnership X. Do you agree?

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