1302007 Informal Interpretation

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Verne, B. Micha el
From:
Sen t: 	Thursday, February 21, 2013 2:05 PM
Verne, B. Michae l; Wa lsh, Kathryn
SOT - Stock Question
To:
Subject:
Mike and Kate:
Thanks, as always, for addressing these questions. Here is a situation I want to run by you.
1. 	Natural person, X, files an HSR on January 1. X already holds 1,000,000 shares of stoc k with a current ma rket
price of $70 per sha r e. (Market price being calculated by the lowest pr ice in the 45 days before the 803.S(a)
noti ce is se nt) .
2. 	X intends to acquire an additional l ,SOO,OO O in additional shares in the 12 months following expira tion of the
HS R waiting period. So at the "market price" calculated off t he 803.5(a) notice, X will exceed the $100 million,
as adjusted, threshol d. 	X files at t hat higher threshold.
3. 	X, in fact, acquires the 1,500,000 shares in the 12 months following the expira ti on of the HSR waiting
period. 	However, the " market price" ofthe stock dropped t o $35 per share, as measured by the lowest closing
price in the 45 days prior to the acquisit ion.
It seems to me that , under 801.10(c)(l), to calculate t he "ma rk et price" f or the sto ck held and acqu ired in (3) , we ca n
use ei the r the lowes t closing bid price i n the 45 days prio r t o the acquisitio n, o r the lowest closing bid price in th e 45
da ys prior to the 803.S(a) notice. 	Do I have t his right? This is important to determine whe t her the $100 million was
exceeded in t he 12 months following the termination of the waiting period, so the 5 year grace pe riod is locked in.
It would certainly seem unfair if the person we re denied t he benefit of the 5 year period by a facts beyond his
co ntr ol. (Both t he stock price and the t iming of the purcha ses, which are subject to restriction by the SEC}.
Thanks,
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For more information
1

You use the 45 days prior to the 803.5(a) notice for the stock
acquired during the year following notification as well as the stock
already held. The whole point of calculating it prior to filing is to
lock in a value. 	So the value of the stock held after the acquisition
during the first year would be 2.5 MM x $70 = $175 MM,
exceeding the $100 million (as adjusted) threshold and allowing
additional acquisitions up to the $500 million (as adjusted)
threshold during the 5 year period. 	The language you reference
in #3 of using either the 45 day period prior to the notice or the 45
day period prior to the acquisition is laying out how you value the
stock if it is reportable (45 days prior to the notice) or non-
reportable (45 days prior to the acquisition).
~p-//
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