Based on the facts provided, we agree that this transaction would not be reportable.
Question
Please confirm our understanding that the below described transaction would not be reportable under the Hart-Scott-Rodino Antitrust Improvements Act, as amended (“HSR Act”).
Company A, which is its own Ultimate Parent Entity, proposes acquiring 100% of the voting securities of Company B. At the time that Company A consummates its purchase of Company B, Company B’s holdings will only consist of: (1) approximately 26% of the voting securities of Company A; (2) cash; and (3) voting securities in Company C, an entity that has a fair market value of less than $126.4 million.
Under 16 C.F.R. §802.4, an acquisition of voting securities of an issuer is exempt if the acquired issuer does not hold non-exempt assets with an aggregate fair market value of, as adjusted, $126.4 million. Accordingly, please confirm our understanding that no filing will be required under the HSR Act, for the following reasons:
1. If Company A were directly acquiring Company A voting securities from Company B, the acquisition of those voting securities would be exempt from the reporting requirements of the Hart-Scott-Rodino Act. Under Sections 801.1(b)(1) and 801.2, Company A is the acquiring and acquired “person” since no one holds 50% or more of its outstanding voting securities. Company A’s acquisition of its own voting securities, therefore, is exempt under 16 C.F.R. §802.30.
2. Cash is an exempt asset under 16 C.F.R.§801.21.
3. The remaining, non-exempt assets—the voting securities in Company C—have a fair market value of less than $126.4 million.
Please let us know if you have any questions or if you disagree with our conclusion that the above-described transaction would be exempt from notification under the HSR Act.