1909005 Informal Interpretation



801.40, 801.50
Sam Sheinberg

We agree with all three of your points.


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.


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.

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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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