1205011 Informal Interpretation

Form Item 4(d)
Kathryn Walsh

– Refer to comments below.


From: Walsh, Kathryn
Sent: Friday, May 18, 2012 11:02 AM
To: (redacted)
Cc: Verne, B.Michael
Subject: RE: Item 4(d)

Youare correct that the scope of 4(c) and 4(d) is meant to be the same. This is apoint we made right after the Final Rule came out last summer by speaking on anumber of panels and participating in several brown bags.

Theintention of 4(d)(i) and 4(d)(ii) is to reach that period during which atransaction is taking shape but nothing definitive has yet been signed. Forinstance, the company knows it wants to put itself up for sale and creates aClM but does not yet have a specific buyer or agreement in place. The ClM isresponsive to 4(d)(i). Once there's a buyer and something has been signed,you're into 4(c) territory with the bulk of your potentially responsivedocuments (4(d)(iii) is a notable exception).

Thatsaid, let me try to answer your questions.

1a. I think it's highly unlikely that there are going tobe two different ClMs created for what is essentially the same underlying poolof assets (whether acquired as assets or through a VS transaction). But, in thecase of the two ClMs you describe, it is only the ClM for the second buyer thatwould be responsive to 4(d)(i).

1b. Only the ClM to the second buyer would be responsiveto 4(d)(i). The ClM created for the first buyer might be a 4(c) document inthis instance if the second buyer somehow used it to evaluate the current deal.

1c. Agree. The seller should submit this ClM even if itwasn't given to the buyer because it involves the same underlying pool ofassets.

2. This would be responsive because it deals with thesame underlying pool of assets. If there were two bankers' books, with onefocusing on the VS structure and one on the asset structure, we would only wantthe one dealing with the asset structure with the second buyer.

Idon't see the clean break doctrine coming up very frequently on 4(d)(ii) or4(d)(iii), but we are always happy to consider specific cases as they arise.

From: (redacted)
Sent: Thursday, May 17, 2012 12:26PM
To: Walsh,Kathryn
Subject: RE: Item 4(dl

Onemore general question to add -can the "clean break" analysis beapplied to 4(d)(ii) and 4(d)(iii)? Thanks.

From: (redacted)
Sent: Thursday, May 17, 2012 11:59AM
To: 'Walsh, Kathryn(kwalsh@ftc.qov),
Subject: Item 4(dl


Ihave some general questions about Items 4(d) (i) and 4(d)(ii) that I was hopingyou could shed some light on.

ThePNO's tip sheet on Item 4(d) states: "Documents responsive to Items4(d)(i) and 4(d)(ii) must relate to "the acquisition" as in Item4(c), because the phrase "specifically relate[d] to the sale of theacquired entity(s) or assets" in Items 4(d)(i] and 4(d)(ii) conveys thesame concept." Does this mean that to be responsive to Item 4(d), offeringmemoranda and third-party analyses must be transaction-specific?

Ihad read the difference between the "for the purpose of evaluating oranalyzing the acquisition" language of 4(c) and the "specificallyrelates to the sale of the acquired entity(s) or assets" language of 4(d)to mean that the scope of 4(d) is broader. The SBP also seems to suggest that"the acquisition" intentionally was not used for 4(d). Now looking atthe tip sheet and the SBP together, I am wondering if it's correct that the 4(d)(i]and 4(d)(ii] do have to be transaction-specific but that the "specificallyrelates" language was used because there technically may not be an"acquisition" at the time they are prepared. Some specific scenarios:

1. Offering memoranda.Earlier in the year,Seller and Buyer A attempted to negotiate a deal whereby Buyer A would acquirea 100% of Seller's voting securities. Seller prepared a CIM for Buyer Arelating to this transaction, but the transaction later was abandoned. A fewmonths later, Seller and potential Buyer Bare negotiating an agreement wherebyBuyer B will acquire a portion of Seller's assets.

a.Assume Seller prepares a CIM for Buyer B in connection with B's proposed assetacquisition, which is a 4(d) (i) document for both Seller and Buyer B. IfSeller does not give the CIM for Buyer A to Buyer B, is it correct that theBuyer A CIM is not a 4(d) (i) document for Seller because it does not relate tothe proposed asset acquisition?

b. If Seller does give the Buyer A CIM to Buyer Bduring the course of negotiations, would that still not be a 4(d)(i) becausethere is a formal CIM that Seller prepared for "the acquisition" byBuyer B?

c.If no CIM is prepared for the transaction with Buyer B, the CIM for Buyer Awould be a 4(d) (i) if it actually was given to Buyer B to serve the purpose ofa CIM.

2.Materials prepared by third-party advisors.

a. An investment bank sends a pitch book to Buyer B abovethat analyzes several potential transactions, one of which is the acquisitionby B of 100% of Seller's voting securities. Would this be a 4(d)(ii) documenteven though it does not relate to "the acquisition"?

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