1111010 Informal Interpretation

Michael Verne

– Agree.


From: (Redacted)

Sent: Tuesday, November 22, 2011 4:09 PM

To:Verne, B.Michael

Subject: Size-of-the-Transaction Analysis

Dear Mike,

This e-mail is written tosummarize and to confirm the guidance and informal opinions that you sharedwith me during our phone conversation on Tuesday, November 22, 2011 regardingthe "Size-of-the-Transaction" analysis under the Hart-Scott-RodinoAntitrust Improvements Act of 1976, as amended (the "HSR Act"), andthe Commission's implementing regulations thereunder.

As I described in ourphone conversation, Corporate Parent intends to sell 100% of the issued andoutstanding noncorporate interests of its Subsidiary through a sale ofSubsidiary's limited liability company interests to Buyer. (Subsidiary'snon-corporate interests are neither traded on a national securities exchange orquoted in an interdealer quotation system of a national securities associationregistered with the SEC.) As currently proposed, Buyer would pay to CorporateParent a purchase price (the "Purchase Price") in an amount equal to$30 million plus an amount equal to the net working capital of Subsidiary as ofthe closing date (which is currently estimated to be approximately $55million), all on a "cash-free/debt free" basis. Subsidiary currentlymaintains approximately $49 million in bona fide inter-company debt owed to a"sister" company of Corporate Parent, which debt would be repaid atthe closing out of the Purchase Price. Accordingly, of the approximately $85million Purchase Price, the anticipated aggregate amount to be paid toCorporate Parent for Subsidiary's non-corporate interests will be approximately$36 million.

During our phone call,you confirmed that for purposes of the Size-of-the-Transaction analysis, it isthe position of the FTC Premerger Notification Office that in the acquisitionof voting securities (or non-corporate interests) amounts paid for the pay-offof debt owed by a target should not be included in the valuation. See ABASection of Antitrust Law, Premerger Notification Manual, Interpretation No. 93(3d Ed. 2003). You also confirmed that the FTC Premerger Notification Office'sposition on the issue is the same, regardless of whether that indebtedness isowed to a third-party or to an affiliate of the target or the target's parent.Accordingly, the "size" of the proposed transaction described abovewill be less than the current jurisdictional threshold of $66.0 million.

We understand that theFTC Premerger Notification Office staff concurs with this interpretation of theHSR Act and its implementing rules and regulations.

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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