1909005 Informal Interpretation

Date:

Tags:

Rule:
801.40, 801.50
Staff:
Sam Sheinberg
Response/Comments:

We agree with all three of your points.

Question

From: Sheinberg, Samuel I.


Sent: Wednesday, September 04, 2019 3:59 PM


To: [Redacted]


Cc: [Redacted]


Subject: RE: Formation question 801.40/801.50

We agree with all three of your points.


Sam

From: [Redacted]


Sent: Tuesday, September 3, 2019 2:43:23 PM (UTC-05:00) Eastern Time (US & Canada)


To: [Redacted]


Cc: [Redacted]


Subject: FW: Formation question 801.40/801.50

Dear all,

We have a JV formation where JV Partner 1 is contributing assets (nonexempt, valued in excess of $90 million) and JV Partner 2 is contributing only cash which will be used to fund the JV entity (the cash will not be distributed out to JV Partner 1). JV Partner 1 and JV Partner 2 will each hold 50% of the JV entity (an LLC). We understand that if one JV partner contributes cash, and the cash contributions stay at the JV entity, this structure is viewed as a formation and not an acquisition (https://www.ftc.gov/enforcement/premerger-notification-program/informal-interpretations/1606002).

Do you agree that:

1. JV Partner 2 would file as acquiring person in a formation filing to hold 50% of Newco’s noncorporate interests (because JV Partner 2 is acquiring control of the assets being contributed to the newly-formed JV entity by JV Partner 1);

2. JV Partner 1 has no filing obligation because in the formation, JV Partner 1 is not acquiring control of any new assets (i.e., because JV partner 2 is only contributing cash to fund the newly-formed JV entity); and

3. The JV entity would not have a filing obligation for the formation.

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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