0703023 Informal Interpretation

Date

March 27, 2007

Rule

802.4

Staff

Michael Verne

Response/Comments

I think that you would reach the conclusion that the acquisition of shares of the Newco would be exempt under 802.4, only if in aggregate the shares contributed by the four parties constituted a minority interest in target. The subsequent acquisition of target by Newco would be non-reportable as well (assuming that none of the four parties control Newco), because all it will hold is cash for the acquisition and voting securities of the issuer to be acquired, both of which are excluded from Newco's size under 801.11(e).

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Question

From: (redacted)

Sent: Tuesday, March 27, 2007 3:56 PM

To: Verne, B. Michael

Subject: Different Inquiry

It is my understanding that if fourparties form a Newco to acquire a target and contribute their shares of targetto Newco, the formation of Newco is not reportable even if the value of Newcoshares received by one or more of the contributors exceeds $60 million. Thesame result applies I believe--although I have not had this specific factpattern arise-- even if they do not own stock but each go into the market to buy$50 million and then form Newco. I do not recall the basis for this conclusion.Is it 801.11(e), combined with the fact that thereis no group concept for HSR Act purposes ?

0703023 Informal Interpretation

Question

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