As long as the single individual trustee is able to act, he/she controls the trust, and would be the UPE. Given that the trust is an entity within the individual/UPE, to the extent you have determined that the trust meets the higher size of person, the individual, as the UPE of the acquired person, would also meet the higher size of person.
Question
I am trying to analyze whether a proposed transaction is required to file under HSR under the following facts concerning an acquisition from an acquired entity of all of the acquired entity’s assets including real estate assets utilized in the business although owned in a separate, but related entity. The assets of the acquired entity are owned and operated by a limited partnership not engaged in manufacturing and based on its most recent financial statements has net sales of $137M and net assets of $142M. The transaction purchase price is $250M which is inclusive of real estate valued at $17.5M. Limited partnership is owned by three (3) partners, a trust which owns 67.16 percent, and two individuals owning 7.46 and 25.36 percent, respectively.
In determining the UPE of a trust and whether the trust is its own UPE, the trust must be (1) irrevocable, which it is, (2) there must not be the retention of a reversionary interest, there is not, and (3) no person may control the trust by reason of a contractual power to “remove and replace” 50% or more of the trustees. The trust currently has a single individual trustee who is also the owner of the 7.46% interest in the limited partnership. The only removal right provides that the current trustee, the current individual trustee, if able to act, and if not, the “Protector Committee” shall have the right to remove the trustee and replace. The Protector Committee is comprised of 4 members acting by majority decision. Because of this provision, the power to designate a replacement trustee is shared or subject to consent of a third party such that no one person has the power to designate 50% or more of the trustees and no one is deemed to control the trust. While the single individual trustee has the power to remove himself since it is the same as having the power to resign, I would not think the single individual trustee would be considered to have the requisite authority to be considered to be controlling the trust. Consequently, it seems as though the trust is its own UPE.
It appears to me that the trust, as the acquired person would meet the larger SOP and the acquiring person would likely meet the smaller SOP resulting in a filing being required.