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0602005 Informal Interpretation
us-ftc-hsr-informal-interpretations-a0f654326ae122332ba2c1c52bb456b10602005 Informal InterpretationGuidance
Date
Rule
801.2
Response/Comments
The conclusion in the letter may be misinterpreted to suggest something less compelling than the need for an ironclad escrow arrangement. A non-reportable number of shares may be acquired pending expiration of the waiting period (unless this would confer control of the issuer). However, the escrow arrangement for shares that are subject to the Act must insulate the acquiring person from receiving beneficial ownership of the stock, including taking title, voting the shares, collecting dividends, disposing of the shares, etc. It also must contain an unwind provision allowing the escrow agent to sell the stock to a third part should the acquisition be challenged. N. Ovuka M. Bruno concurs. 02/02/2006 Yes.
Question
From: (redacted)
Sent: Thursday,February 02, 2006 8:16 AM
To: Verne, B.Michael
Cc: (redacted)
Subject:HSR Question re: Escrows
Mike,
I'm writing to follow up ona discussion we had earlier this week regarding escrow arrangements in thecontext of a foreign tender offer. Please assume that the Acquiring Person andthe Acquired Person are non-U.S. persons, both satisfy the size of personstest, and the size of transaction test is satisfied.
I understand that, pendingHSR clearance, tendered shares may be acquired so long as any shares at or inexcess of 50% are placed in an escrow account that explicitly precludes theacquirer from exercising any voting rights or receiving dividends. Any suchescrow arrangement must be structured so that the shares must be sold by theescrow agent if the FTC or DOJ successfully challenges the transaction.
Please let me know if I havecharacterized the PNO's position accurately.
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