8301014 Informal Interpretation

801.10; 801.13
Many Ann Dunaitis



January 31, 1983
Mary Ann Dunaitis, Esq.
Premerger Notification Office
Federal Trade Commission
Washington, D.C. 20580

Dear Ms. Dunaitis:

This will confirm our telephone conversation of

January 26, 1983, in which we discussed the proper valuation

of securities purchased in stock-exchange transactions.

I related to you the following hypothetical facts:

A person meeting the size of person criteria purchases

securities in company X beginning on December 1, 1982. By

January 26, 1983 he has purchased 500,000 shares. During the

45-day period prior to January 26, 1983 the stocks lowest

closing quotation was $20 (occurring on December 20). The

stock now sells for $30. As of January 26, the acquiring

person may purchase up to 166,666 shares, since the stock

previously held is valued at $10 million and the stated

number of shares, at $30 each, is less than $5 million.

This, the $15 million threshold would not be crossed.1 As of

January 27, however, additional shares may be purchased, the

acquiring person would hold 666,666 shares, all of which

would be valued at $20, and could purchase another $1,666,679

of stock (valued at $30, assuming price held a steady). This

process of purchasing and revaluing may continue until the

$15 million or 15% threshold is crossed.


1. We assume throughout that the 15% threshold will not be


You confirmed the correctness of this interpre-

tation of Rules 801.10 and 801.13. We thank you for your


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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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