2108001 Informal Interpretation

Sheinberg, Samuel I.
From: 	HSRHelp
Sent: 	Thursday, August 12, 2021 11:54 AM
To: 	Walsh, Kathryn E.; Berg, Karen E.; Sheinberg, Samuel I.; Six, Anne; Musick, Vesselina; Shaffer, Kristin
Subject: 	FW: CONFIDENTIAL
To:
Cc: HSRHelp <HSRHelp@ftc.gov>
From: Whitehead, Nora <nwhitehead@ftc.gov>
Sent: Thursday, August 12, 2021 11:54:22 AM (UTC-05:00) Eastern Time (US & Canada)
Subject: RE: CONFIDENTIAL
We agree that the acquisition of less than 50% of the LLC interests is not reportable. However, we disagree with your
analysis of the possible future acquisition of LLC interests. Company A’s acquisition of 50% or more of the LLC B’s
interests is a potentially reportable acquisition.
From: HSRHelp <HSRHelp@ftc.gov>
Sent: Wednesday, August 11, 2021 8:11 AM
To: Walsh, Kathryn E. <kwalsh@ftc.gov>; Berg, Karen E. <KBERG@ftc.gov>; Sheinberg, Samuel I.
<SSHEINBERG@ftc.gov>; Six, Anne <asix@ftc.gov>; Whitehead, Nora <nwhitehead@ftc.gov>; Musick, Vesselina
<vmusick@ftc.gov>; Shaffer, Kristin <kshaffer@ftc.gov>
Subject: FW: CONFIDENTIAL
From:
Sent: Wednesday, August 11, 2021 8:09:55 AM (UTC-05:00) Eastern Time (US & Canada)
To: HSRHelp <HSRHelp@ftc.gov>
Subject: CONFIDENTIAL
Dear PNO Staff,
This is a question about the definition of “acquisition” under the HSR Act. Company A, a publicly traded SPAC, plans to
acquire less than 50% of the economic interests in LLC B and all of the voting rights in LLC B. In consideration for the
acquisition, the selling members of LLC B will receive voting securities of Company A. The non-selling members of LLC B
(“Non-Selling Members”) will receive the right to put their interests in LLC B to Company A at some point in the future,
in exchange for voting securities of Company A. Company A has no control over when, or whether, a Non-Selling
Member will decide to exercise their put right. It is possible that only some, or no, Non-Selling Members will ever
exercise that put right. Company A may not even know about a Non-Selling Member’s exercise of the put right until the
Non-Selling Member actually exercises that right. A 50% economic stake in LLC B, however, would satisfy the $200
million, as adjusted, size-of-transaction threshold. Thus, it is possible that, at some point in the future, a sufficient
number of Non-Selling Members would exercise their put right to cause Company A to hold 50% or more of the
economic interests in LLC B, and that, as a result, Company A would hold a controlling stake in LLC B that is valued in
excess of the $200 million size-of-transaction threshold. Assume that no member of LLC B, now or in future, would make
a reportable acquisition of voting securities of Company A.
Company A’s contemplated acquisition of less than 50% of the economic interests in LLC B is not reportable because it
does not confer control of LLC B to Company A.
In addition, we believe that Company A’s possible future receipt of additional economic interests in LLC B as a result of
Non-Selling Members’ exercise of their put right, even if it causes Company A to hold 50% or more of LLC B’s economic
interests, is not a reportable event because it is not an “acquisition,” but rather a maturation of inchoate rights outside
of Company A’s control. See PNPM No. 40. Thus, we believe that neither Company A’s current acquisition of less than
50% of the economic interests in LLC B, nor Company A’s future receipt of LLC B’s interests as a result of Non-Selling
Members’ exercise of their put right, would require an HSR filing.
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As always, your views in this respect would be much appreciated.
Best regards,
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