1709006 Informal Interpretation

1
Haynes, Lanea
From: 	Berg, Karen E.
Sent: 	Wednesday, October 18, 2017 5:01 PM
To: 	Gillis, Diana L.
Subject: 	FW: Non-Voting Securities Question
From: Berg, Karen E.
Sent: Thursday, September 14, 2017 2:50 PM
To:
Subject: RE: Non-Voting Securities Question
In the transaction you describe, you need only value the voting securities of Corporation X to determine the size of
transaction.
Karen
From:
Sent: Tuesday, September 12, 2017 6:42 PM
To: Berg, Karen E.
Subject: Non-Voting Securities Question
Karen—
This may be a very rudimentary question and, if so, I apologize for clogging your email inbox. My client is in discussions
to acquire all of the capital stock of Corporation X. The capital stock of Corporation X is divided between 100 Voting
Common Shares and 900 Non‐Voting Common Shares. I know that the acquisition of non‐voting securities is
disregarded, so the value of those shares should not be included in determining whether the size‐of‐transaction test has
been satisfied.
However, Corporation X owns 99% of the membership interests in LLC Y, and my client will also acquire the remaining
1% of the membership interests in LLC Y. As a result of the acquisition of all of the capital stock of Corporation X and the
acquisition of the remaining 1% of membership interests in LLC Y, my client will own (directly) all of the capital stock of
Corporation X and (directly or indirectly) all of the membership interests in LLC Y.
It appears as though, if the non‐voting common shares are removed as exempt, then, based on the FMV of the
remaining items being acquired (the voting common shares of Corporation X and the 1% membership interest in LLC Y),
the SOT threshold will not be satisfied. I believe that this is the correct HSR analysis (Informal Interpretation #1607003
seems to support this conclusion). Is that right? I am seeking confirmation, since if my client had instead directly
acquired all of the membership interests in LLC Y, this transaction would have satisfied the SOT threshold, and I believe
that Corporation X may simply be a holding company.
Thank you for your time.
Best regards,