Question
BY HAND
Mr. Michael Verne
Premerger Notification Office
Â鶹´«Ã½ Trade Commission
6th & Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Re:Section 801.4 of the Hart-Scott-Rodino Rules
Dear Mr. Verne:
I write to confirm our telephone conversation today in which you advised that your Office interprets Section 801.4 of the Hart-Scott-Rodino (“HSRâ€Â) Rules, 16. C.F.R. § 801.4, not to require a secondary acquisition HSR notification in a primary transaction of the kind described below.
In the primary transaction, our client (redacted) and (redacted) intent to combine their respective businesses into a newly-formed corporation (“Parentâ€Â). The consolidation will be accomplished by a “merger of equals†in the following form: (1) A wholly-owned subsidiary of Parent will be merged with and into (redacted) with (redacted) the surviving corporation. (2) A second wholly-owned subsidiary of Parent will be merged with and into (redacted), with (redacted) the surviving corporation. (3) Each outstanding share of (redacted) stock and of (redacted) stock will be converted automatically int the right to receive a specified number of shares of Parent common stock. Thus, as a result of the transaction, (redacted) and (redacted) will be wholly-owned subsidiaries of Parent. The parties each filed HSR Notification and Report Forms with respect to this transaction on July 30, 1999, as both acquiring and acquired persons, pursuant to HSR § 801.2(d)(2).
In our telephone conversation, we discussed whether under the “secondary acquisition†rule of HSR §801.4(a) and Example 6 to that section, (redacted) may be required to file a separate HSR notification with respect to a deemed “acquisition†of (redacted) minority holdings of a third-party issuer’s voting securities. Section 801.4(a) provides that when an acquiring person in a primary acquisition “will obtain control†of a person that holds such minority interests, the indirect “acquisition†of those minority holdings may be separately subject to HSR filing requirements. Example 6 under that section suggests that persons in a consolidation may be deemed to have such secondary acquisitions within the meaning of this rule. In our conversation, however, you explained that your Office has concluded that there is no need to require burdensome secondary acquisition HSR notifications in a consolidation unless the consolidating persons each hold minority interests in the same issuer. Thus you advised that, under your Office’s informal interpretation of the rules, (redacted) will not be required to make the HSR filings for a deemed secondary acquisition of (redacted) minority holdings unless (redacted) also holds voting securities in the same third-party issuer as (redacted).
(Redacted) and (redacted) do not hold minority interests in the same third-party issuer, and thus, (redacted) is not required to make a secondary acquisition HSR filing.
Thank you for your time and help today to discuss your Office’s informal interpretation with me. If this letter does not accurately summarize the advice that you gave me and the position of your office, I ask that you please contact me promptly.
Sincerely,
(redacted)