0203007 Informal Interpretation

Date

March 15, 2002

Rule

7A(c)(7)

Staff

Michael Verne

Response/Comments

Advised writer that no filing is required for Merger 1. DOJ concurs, with note that acquisition of any financial subs of the industrial loan company may be separately subject to the Act. Writer advises there are no such subs.

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Question

From: [redacted]
To: ("mverne@ftc.gov")
Date: 3/15/02
Subject: HSR Exemption Inquiry

Mr. Verne,

Thank you for the prompt consideration and response to my inquiry by phone. Pursuant to your request, the structure and banking agencies involved in the acquisition transaction we are negotiating are summarized below. The transaction would be a single transaction with multiple steps occurring as part of its closing. The transaction will exceed the threshold value of $50 million under the Hart-Scott-Rodino Act (HSR Act).

1. Merger 1 - A savings and loan holding company will acquire the holding company parent of an industrial loan company by merger.

2. Merger 2 - The industrial loan company will then be merged into the savings bank subsidiary of the savings and loan holding company with the savings bank as the resulting institution.

3. The acquired holding company, which has no other activities or subsidiaries other than the industrial loan company, will then be dissolved. The industrial loan company is an FDIC-insured depository institution and is defined as a "state bank" in Section 3(a)(2) of the Federal Deposit Insurance Act (FDI Act) (12 USC 1813(a)(2)). As we discussed, by contrast, an industrial loan company is excluded from the definition of "bank" in Section 2(c)(2)(H) of the Bank Holding Company Act.

Merger 2, the merger of an industrial loan company into a savings bank, with the savings bank as the resulting institution, is subject to prior agency approval under the Bank Merger Act by the Office of Thrift Supervision (OTS) as provided in FDI Act Section 18(c)(2)(D) (12 USC 1828(c)(2)(D)). The OTS has advised us that Merger 1 need not be submitted to the OTS because Merger 2 is subject to its review and approval, as noted above.

As you know, Section 7A(c)(7) of the HSR Act exempts from the preacquisition notification and waiting period requirements transactions which require prior agency approval under Section 18(c) of the FDI Act. We seek your confirmation that no notification will be required for the proposed transaction because it is subject to agency approval by the OTS and notwithstanding that Merger 1 will not be subject to an advance antitrust review.

Thank you for your assistance and guidance.

Rule(s): 801.2
Staff: Michael Verne
Response: Advised writer that this is the correct analysis (N. Ovuka concurs) B. Michael Verne 3/15/02
File #: 0203007
TELECOPY COVERSHEET
TO: MR. MICHAEL VERNE FAX#: 202-326-2624
Federal Trade Commission PH.#: 202-326-3167
RE: HSR Filing Requirements for Pro used Transaction
Mr. Verne, attached is a chart that shows the organizational structure of two UPE's (A & and their subsidiaries that
are discussing a transaction. As shown on the chart, corp,'s A and B each currently holds 50% of partnership P which
has no assets other than some cash and its membership interests in LLCx and LLCy. LLCx and LLCy are ongoing
businesses with operating assets. The two-step transaction is as follows:
1. A2 would acquire a partnership interest in P, which has the effect of reducing B's partnership in P to less
than 50%.
2. P redeems B's partnership interest in P through a distribution to B of P's 20% interest in LLCy.
As a result of the transactions, A holds indirectly 100% of LLCx's membership interests; and B hold; directly or
indirectly 100% of LLCy's membership interests.
Our tentative conclusion is that due to the "roll-up's" of LLCx and LLCy, A, as acquiring and acquired, makes an
HSR fling with respect to its acquisition of the assets of LLCx, and B, as acquiring and acquired, makes an HSR filing
with regard to its acquisition of the assets of LLCy, A's acquisition, through P's redemption of B's partnership interest,
of all of the partnership interests of P, which has nn operating assets, Is disregarded.
We would appreciate the opportunity of consulting with you to confirm our analysis. We will give you a call this
afternoon (maybe around 2PM) with the hope that you will have time to provide your insight. My email address is
below if you would like to suggest a time more convenient for you.

0203007 Informal Interpretation

Question

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