2110004 Informal Interpretation

Date

October 7, 2021

Rule

Item 1(f)

Staff

Kristin Shaffer

Response/Comments

Thank you for checking. We agree that Individuals I and F are the UPEs. Since each of those individuals control the entity that holds 75% of the target, we advise listing 75% in Item 1(f). You may provide further explanation in an endnote.

Original Image - 2110004 Informal Interpretation (290.34 KB)

Question

From: Shaffer, Kristin <kshaffer@ftc.gov>
Sent: Thursday, October 7, 2021 2:37:14 PM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Cc: [Redacted]
Subject: RE: Request for HSR Guidance

[Redacted]

Best regards,

Kristin

From: [Redacted]
Sent: Wednesday, October 6, 2021 3:53 PM
To: HSRHelp <HSRHelp@ftc.gov>
Cc: [Redacted]
Subject: Request for HSR Guidance

We write to request informal guidance regarding identification of the UPE(s) of an acquired entity, and how to state the UPEs’ holdings for purposes of Item 1(f). The facts are as follows:

The acquired entity is a corporation (A Inc.).
B LLC holds 75% of A Inc.’s voting securities and has the current contractual power to designate 50% or more of A Inc.’s board of directors.
C LLC has the right to 50% or more of B LLC’s profits or assets after dissolution.
C LLC is held as follows:
1. D Trust has the right to 25% of C LLC’s profits or assets after dissolution.

The UPE of D Trust is F Individual.

b. E LLC has the right to 25% of C LLC’s profits or assets after dissolution.

E LLC is a sole member LLC. F Individual has the right to 100% of E LLC’s profits or assets on dissolution.

c. G LLC has the right to the remaining 50% of C LLC’s profits or assets after dissolution.

H Trust has the right to 50% of G LLC’s profits or assets after dissolution.

1. The UPE of H Trust is I Individual.

I Individual has the right to 50% of G LLC’s profits or assets after dissolution.

Accordingly, F Individual and I Individual each indirectly hold 50% of C LLC.

Based on the foregoing facts, and applying the HSR control test up the various chains until reaching the individuals or entities that are not controlled by any other individual or entity (§ 801.1(a)(3)), we believe that A Inc. has two UPEs: (1) F Individual, and (2) I Individual, each of whom indirectly holds 37.5% of A Inc.

Can you please:

Advise if you agree, based on the foregoing facts, that the UPEs of A Inc. are F Individual and I Individual; and
If so, for purposes of Item 1(f) (“percent of voting securities or non-corporate interests that the UPE holds directly or indirectly in the acquiring or acquired entity”), advise whether we should state that each UPE holds 37.5% of the acquired entity, or whether we should combine the two UPEs’ holdings and state that they collectively hold 75% of the acquired entity. We have not found anything in the rules or guidance suggesting whether to provide, for purposes of Item 1(f), a separate percentage for each UPE or a combined percentage for both UPEs where there are multiple UPEs.

Thank you in advance.

Sheinberg, Samuel I.
From: 	HS RH elp
Sent: 	Thu rsday, October 7, 2021 2:37 PM
To: 	Walsh, Kat h ry n E.; Ber g, Karen E.; Sheinberg, Samuel I.; Six, An ne; Whitehead, No ra ; Musick, Vesse li na
Subject: 	FW: Req uest for H SR Gu ida n ce
From: Shaffer, Kr istin < kshaffer@ftc.gov>
Sent: Thursday, October 7, 2021 2:37:14 PM (UTC-05:00) Easte rn Time (US & Canada )
To:
, 	SRHe lp <HSRHelp@ftc.gov>
Thank you for checking. We agree that Individuals I and Fare the UPEs . Since each of those individua ls contro l the ent ity
-that holds 75% of the target, we advi se listing 75% in Item l (f). You may provide further explanation in an endnote.
Best regards,
Kr istin
Kristin Shaffer
Attorney
Premerger Noti fi cation O ffice
Federal Trade Commission
202-326-2388 I kshaffer@h c.gov
From :
Sent: Wednesday, October 6, 2021 3:53 PM
To: HSRHe lp <HSRHelp @ftc.gov>
Cc:
Subject: Request for HSR Gu idance
He ll o,
We w rite to request informal guidance regarding identification of the UPE (s) of an acquired entity, and how to state the
UPEs ' ho ldi ngs for purposes of Item l (f). The facts are as fo llows (given the complexity, I am also enclosing a blinded
organizational chart for ease of reference):
1. 	The acquired entity is a corporation (A Inc.).
2. 	B LLC ho lds 75 % of A lnc.'s voting securit i es and has the current contractual po w er to designate 50% or more of
A l nc .' s board of directors.
3. 	C LLC has the right to 50% or more of B LLC' s profits or assets after di sso lution.
4. 	C LLC is held as follows:
a. 	D Trust has the right to 25% of C LLC' s profi ts or assets after disso lut ion.
The UPE of D Trust is F Individua l.
b. 	E LLC has the right to 25% of C LLC's profits or assets after di sso lut ion.
E LLC is a sole member LLC. F Ind ividual has the right to 100% of E LLC's profits or assets on d is so l ut ion.
c. 	G LL C has the right to the remaining 50% of C LLC' s profi ts or assets after disso l ut ion.
H Trust has the right to 50% of G LLC's profits or assets after d is so l ut ion.
1. 	The UPE of H Trust is I Individua l.
I Individual has the right to 50% of G LLC' s pro fi ts or assets after di sso lut ion.
d. 	Accordingly, F Individual and I Ind ividua l each i nd irectly ho ld 50% of C LLC.
Based on the foregoing facts, and applying the HSR control test up the various chai ns unt il reaching the individuals or
ent it i es that are not contro lled by any other individual or ent ity (§ 801.1(a)(3)), we believe that A Inc . has t wo UPEs: (1) F
Individual, and (2) I Individual, each of w hom indirectly ho lds 37.5% of A Inc.
1

Can you please:
1. 	Advise if you agree, based on the foregoing facts, that the UPEs of A Inc. are F Ind ividual and I Individual; and
2. 	If so, for purposes of Item l(f) ("percent of vot ing securiti es or non-corporate interests that the UPE holds
directly or indirectly in the acquiring or acquired ent ity"), advise whether we shou ld state that each UPE ho lds
37.5% of the acquired ent i ty, or whether we should combi ne the two UPEs ' ho ldi ngs and state that they
collectively ho ld 75 % of the acquired ent ity. We have not found anything in the rul es or gu idance suggesting
whether to provide, for purposes of Item l(f) , a separate percentage for each UPE or a combined percentage for
both UPEs where there are mult iple UPEs.
Thank you in advance.
* * *
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2110004 Informal Interpretation

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