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Date
Rule
15 USC 18a 7A(c)(10), 802.4
Staff
Michael Verne
Response/Comments
The only person who will hold voting securities that it did not hold prior to the transaction is B who will hold a controlling interest in A. Because pre-transaction all of A's assets are exempt, the B acquisition of A voting securities is exempt under 802.4. No current A shareholders would be required to separately file notification, because their acquisitions are exempt under 7A(c)(10).

Question

From:(redacted)

Sent:Monday, February 05, 2007 10:18 AM

To:Verne, B. Michael

Subject:SR Hypothetical

Confidential Mike,

Iwanted to confirm that the following transaction would not be reportable underthe Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Company A is a publicly traded special purposeacquisition company. It assets currently consist of only cash or cash equivalents. Company B is apublicly traded corporation. Company B has a wholly owned subsidiary, BSubsidiary.

Pursuantto a proposed transaction, Company A will be merged into B Subsidiary withCompany A as the surviving entity. As a result of the transaction, Company Bwill receive newly issued shares of votingsecurities of Company A accounting for the majority of the voting securities ofCompany A post close. The remaining voting securities of Company A willcontinue to be held by the same shareholders holding Company A votingsecurities immediately before the close of the transaction, the Pre-CloseCompany A Shareholders. The Pre-close Company A Shareholders will collectivelyhold a minority interest in Company A after the transaction closes as theinterests of those shareholders will be diluted by the issuance of Company Avoting securities to Company B.

Isthe acquisition by Company B of a majority of the voting securities of CompanyA exempt under 16 C.F.R. Section 802.4 regardless of the value of those voting securitiesas Company A only holds exempt assets -- cash and cash equivalents --pre-close, or is the acquisition potentially reportable given that Company Awill acquire B Subsidiary as a result of the transaction, and B Subsidiaryholds non-exempt assets?

Couldyou please also confirm that there would be no other potentially reportableevent arising out of this transaction. Am I correct that Company A'sacquisition of B subsidiary is exempt since B Subsidiary's parent pre-close,Company B, will control Company A as a result of the transaction throughacquiring a majority of the voting securities of Company A? Does it matter thatCompany A will acquire B Subsidiary immediately before the controlling amountof Company A shares are transferred to Company B? Am I also correct that noneof the Pre-close Company A Shareholders will be deemed to be making anyacquisition for SR purposes as a result of the proposed transaction. Theseshareholders will continue to hold the same number of shares of Company A,although their percentage ownership will be diluted, and Company A will nowhold all interests that had been held by B Subsidiary.

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