1703002 Informal Interpretation

1
Haynes, Lanea
From: 	Shaffer, Kristin
Sent: 	Wednesday, March 01, 2017 9:25 AM
To:
Subject: 	RE: Informal Interpretation 1211011 Clarification
You do understand the clarification correctly.
Best regards,
Kristin
________________________________
Kristin Shaffer
Attorney
Premerger Notification Office
Federal Trade Commission
202-326-3434 | kshaffer@ftc.gov
From:
Sent: Tuesday, February 28, 2017 5:53 PM
To: Shaffer, Kristin
Subject: Informal Interpretation 1211011 Clarification
Kristin,
I have a question about Informal Interpretation 1211011, and the new update appended to it as of February 16, 2017,
that states: “For clarification, the PNO's current position is that the repayment of debt may be deducted from the
acquisition price only where the debt is held by, or secured by, Target.”
I assume that when the PNO is talking about and possibly distinguishing between the “seller” and the “target,” the seller
is the ultimate parent entity and the target is the acquired entity. I can see a situation where the UPE of the seller has
some debt, either itself or in Subsidiary B; it is selling Subsidiary A (the target), and the UPE is using the proceeds of the
sale of Subsidiary A to pay off Subsidiary B’s debt. If I am understanding the February 16 update correctly, then in that
situation payment of Subsidiary B’s debt owed to a third party or to the parent out of the sale proceeds could not be
deducted from the acquisition price.
However, in a situation where the Subsidiary A owes the debt or Subsidiary A secures the debt, and that Subsidiary A
debt is being paid out of proceeds of the acquisition of Subsidiary A, the repayment of the debt may be deducted from
the acquisition price.
Am I understanding the clarification correctly?