2202006 Informal Interpretation

Date

February 1, 2022

Rule

801.10

Staff

Kristin Shaffer

Response/Comments

We disagree. The description below contemplates the acquisition of 100% of two entities; the fact that there are multiple sellers does not factor into the analysis here (other than potentially with regards to Rule 801.30).

If A, Inc., is just a holding company for the interests in C, LLC, Buyer should look at the transaction as the acquisition of 100% of C, LLC.
If A, Inc., holds additional assets, Buyer should look at the transaction as two acquisitions: one for the acquisition of 100% of A, Inc., and one for the secondary acquisition of 100% of C, LLC.

Best regards,

Kristin

Original Image - 2202006 (267.53 KB)

Question

From: Shaffer, Kristin <kshaffer@ftc.gov>
Sent: Tuesday, February 1, 2022 9:54:24 AM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Cc: [Redacted]
Subject: RE: Question regarding Size of Transaction

[Redacted]

If A, Inc., is just a holding company for the interests in C, LLC, Buyer should look at the transaction as the acquisition of 100% of C, LLC.
If A, Inc., holds additional assets, Buyer should look at the transaction as two acquisitions: one for the acquisition of 100% of A, Inc., and one for the secondary acquisition of 100% of C, LLC.

Best regards,

Kristin

From: [Redacted]
Sent: Monday, January 31, 2022 2:50 PM
To: HSRHelp <HSRHelp@ftc.gov>
Cc: [Redacted]
Subject: Question regarding Size of Transaction

Dear PNO,

I’m writing to confirm the proper calculation of size of transaction for HSR purposes. Please note that the total price to be paid by the buyer has been determined.

Relevant companies and their ownership structure at the time of acquisition:

A, Inc., which holds 60% of C, LLC

C, LLC – 60% owned by A and 40% owned by minority investors B, C, D, E, F, and G

A-G all have different UPEs; approx. 10% of A's voting securities are held by a different UPE (H) than the holder of the majority of A's voting securities.

In the proposed transaction, buyer will directly acquire:

(1) 100% of the securities (voting and non-voting) of A; and

(2) the 40% of C held by B-G via a merger by a merger sub with C

The acquisitions will occur simultaneously. C holds additional subsidiaries that will be acquired indirectly.

Because control of C will be obtained indirectly through the buyer’s acquisition of A, the size of transaction for HSR purposes is the acquisition price for the voting securities of A. The acquisition price for the separate acquisition of 40% of C from minority holders B-G would not be added to the size of transaction, as the value of the controlling interest in C is reflected in the purchase price for the voting securities of A, and the acquisition of a non-controlling interest in a non-corporate entity is not reportable under HSR. Additionally, the acquisition price for the 10% of voting securities of A sold by H is below the HSR reporting threshold and would therefore not be added to the size of transaction.

Please advise if you agree. Thank you.

Sheinberg, Samuel I.
From: 	HSRHelp
Sent: 	Tuesday, February 1, 2022 9:54 AM
To: 	Walsh, Kathryn E.; Berg, Ka ren E. ; Musick, Vessel ina; Sheinberg, Samuel I. ; Six, Anne; Wh itehead, Nora
Subject: 	FW: Question regarding Size of Transaction
From: Shaffer, Kristin <kshaffe r@ ftc.gov>
Sent: Tuesday, February 1, 2022 9:54:24 AM (UTC-05:00) Eastern Time ( US & Ca nada)
To:
Cc:
We disagree. The descr i pt ion below contemp lates the acquisi tion of 100% of tw o entit ies; the fact that there are
-mult iple se ll ers does not factor i nto the analysis here ( other than potent ially wi th regards to Ru le 801.30).
• 	If A, Inc., is ju st a ho lding company for the interests in C, LLC, Bu y er should look at the transacti on as the
acquisit ion of 100% of C, LL C.
• 	If A, Inc., ho lds addit ional assets, Bu y er should look at the tran saction as t w o acquisitions: one for the acquisit ion
of 100% of A, Inc., and one for the secondary acqui si tion of 100% of C, LLC.
Best regards,
Kristin
Kristin Shaffer
Attorney
Pr emerger Notificat ion Office
Federal Trade Commission
202-32 -
From:
Sent: Monda y, January 31, 2022 2:50 PM
To: HSRHelp <HSRHelp@ftc.gov>
Cc:
Subject: Question regarding Si ze of Transaction
Dear PNO,
I' m wri ting to confirm the proper ca l cu lation of si ze of tran saction for HSR purposes. Plea se note that the tota l price to
be paid by the buy er has been determ ined.
Re lev ant companies and their ow nership structure at the time of acquisit ion:
A, Inc., which holds 60% of C, LLC
C, LLC - 60% owned by A and 4 0% owned by mi nority invest ors B, C, D, E, F, and G
• 	A-G all have different UPEs; approx. 10% of A's vot ing secu rit ies are held by a different UPE (H)
than the holder of t he majori ty of A's vot ing securities.
In the proposed transacti on , buy er will direct ly acquire :
(1) 100% of the se c ur it ies (v oting and non-v oting ) of A; and
(2) the 40% of C held by B-G via a merger by a merger sub wi th C
The acquisi tions will occur si mu ltaneous ly . C ho lds addit iona l sub si diaries that wi ll be ac quired i nd irectly.
Be c au se contro l of C will be obta ined indirectly through the buy er' s acquisit ion of A, the size of tran saction for HSR
purposes is the acquisit ion pr i ce for the v oting sec ur it ies of A. The acqui si tion pr i ce for the separate acquisit ion of 40 %
of C from mi nor it y ho lders B-G w ou ld not be added to the size of transact i on , as the value of the contro lling interest in C
is reflected in the purchase price for the v oting securit ies of A, and the acquisit ion of a non-contro ll ing i ntere st in a non-
1

corporate ent i ty is not reportable under HSR. Addit iona ll y, the acquisit ion price for the 10% of vot ing securit ies of A so ld
by H is bel ow the HSR report ing thresho ld an d wou ld therefore not be added to the si ze of transacti on .
Please advi se if you agree. Thank you.
-
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2202006 Informal Interpretation

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