April 22nd 1983
Sandra Vides, Esq.
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
Washington, D.C. 20580
I am writing to confirm our telephone conversation
of Monday, April 16, 1983, in which I described a proposed
transaction, and we discussed the applications of the Hart-
Scott-Rodino premerger notification reporting requirements.
I would appreciate it if you would advise me if this letter
fails to reflect our discussion and conclusion accurately.
The fact are as follows: A corporation, X, is
held by two individuals, A and B, each of whom owns 50% of
Xs common stock. Corporation X plans to sell assets worth
approximately $43 million (the Assets) to Partnership No. 1,
in which individuals A and C are equal partners. Partnership
No. 1 presently has no assets and will finance the proposed
acquisition through borrowing that will occur contemporaneously
with acquisition. In addition, individuals A and C are
also equal partners in another partnership, Partnership No, 2,
which has assets worth approximately $30 million. At some
time in the future, Partnership No. 2 may acquire the Assets
from Partnership No. 1.
On the basis of these facts, you advised me that no
premerger notification report would be required for the
following reasons: A partnership is treated as its own ultimate
parent entity. The acquisition of the Assets by Partnership
No. 1 from Corporation X is not reportable because Partner-
ship No. 1 does not meet the size-of-person test, but
rather go to the size of the transaction.
Further, the possible subsequent acquisition of the
Assets by Partnership No. 2 would not be reportable because
the persons involved would not meet the size-of-person test
(Partnership No. 1 having approximately $43 million in assets
and Partnership No. 2 having approximately $30 million in
assets). Thus, as long as the use of tow partnership was
necessary for reasons other than avoidance of the premerger
notification reporting requirements, no premerger reports
would be required.
If, however, Corporation X sold the Assets directly
to Partnership No. 2, a premerger notification report would
be required unless an exemption were available, since the
size-of-person and size-of-transaction tests would be satisfied.
I appreciate your advice and assistance on this