Size of Transaction Threshold Test (Interpretations 22 - 78)

• Pages: 45-140

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SIZE OF TRANSACTION THRESHOLD TEST

Size of Transaction Threshold Test 47

22 Applicable provisions. 7A(a)(2), 801.10, 801.12, 801.13,

801.14, 801.15.

Issue. What is the size of transaction test?

Analysis. An acquisition is subject to the HSR Act’s reporting and

waiting period requirements if (1) it is valued in excess of $200 million

(as adjusted) or (2) it is valued in excess of $50 million (as adjusted), but

no greater than $200 million (as adjusted), and also satisfies the size of

person test described in the HSR Act. See Section 7A(a)(2). The size of

person test is not applicable if the acquisition is valued in excess of

$200 million (as adjusted).

In general, the size of transaction test is satisfied if, as a result of the

acquisition, the acquiring person will hold an aggregate amount of assets,

voting securities and controlling non-corporate interests of the acquired

person valued in excess of $50 million (as adjusted). Except in certain

circumstances, the size of transaction test requires that assets, voting

securities, and non-corporate interests of the acquired person that have

been acquired previously by the acquiring person must be aggregated

with those that will be acquired in the proposed transaction.

Section 801.13 determines what is “held as a result of the acquisition,”

and Sections 801.13 and 801.14 specify how such assets, voting

securities, and non-corporate interests should be aggregated and valued.

Section 801.15 describes some special circumstances in which the prior,

simultaneous, or subsequent acquisition is exempt from notification and

need not be included in the size of transaction calculation.

The aggregation rules contain many subtleties; nevertheless, some

basic principles apply. See When to Aggregate under the HSR Act,

available at http://www.ftc.gov/enforcement/premerger-notification-

program/hsr-resources/when-aggregate-under-hsr-act.

If an acquiring person holds less than 50 percent of t he voting

securities of one issuer included within the acquired person and plans to

acquire voting securities of a different issuer included within the same

acquired person, Section 801.14 would require the acquiring person to

aggregate these holdings to determine the value of the securities to be

held as a result of the acquisition. Note, however, that an acquisition of

non-corporate interests that does not confer control of the unincorporated

entity is not aggregated with any other assets, voting securities or non-

corporate interests of a different unincorporated entity that have been or

will be acquired from the same acquired person. Section 801.13(c)(2).