On January 24, 2012, the Federal Trade Commission (FTC) released the revised thresholds used in determining whether parties to certain acquisition transactions are required to comply with the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The thresholds are revised on an annual basis by the FTC to reflect changes in the gross national product. The revised thresholds announced on January 24, 2012 will become effective on February 27, 2012.
The HSR Act generally requires parties to certain acquisition transactions (including, without limitation, acquisitions of assets, stock and other equity interests, certain joint venture formations and other business combinations) to: (a) notify the FTC and the Department of Justice (DOJ) of the proposed transaction through a pre-acquisition filing; and (b) observe the waiting period (typically 30 days from the date of the pre-acquisition filing) before consummating the proposed transaction.
Most commonly, an acquisition transaction is subject to the HSR Act if both the “Size of Person” and the “Size of Transaction” tests are satisfied.
Size-of-Person: Generally satisfied if one party to the transaction has more than $136.4 million (up from $131.9 million in 2011) in annual net sales or total assets, and the other party has more than $13.6 million (up from $13.2 million in 2011) in annual net sales or total assets. 1
Size of Transaction. Generally satisfied if, as a result of the transaction, the acquiring party will hold more than $68.2 million (up from $66.0 million in 2011) of voting securities or assets of the acquired party. Note that the “Size of Person” test does not need to be separately satisfied if, as a result of the transaction, the acquiring party will hold more than $272.8 million (up from $263.8 million in 2011) of voting securities or assets of the acquired party.
Also effective February 27, 2012, the filing fees for pre-acquisition filings pursuant to the HSR Act shall be as follows:
Value of Assets / Voting Securities Acquired
$68.2 million to less than $136.4 million
$136.4 million to less than $682.1 million
Greater than $682.1 million
Please note that numerous exemptions and aggregation calculations may apply when determining, among other things: (a) whether a pre-acquisition filing is required pursuant to the HSR Act ; and (b) the correct filing fee for the filing. In addition, those that fail to comply with the requirements of the HSR Act are subject to a statutory penalty of up to $16,000 per day of non-compliance. Therefore, parties to an acquisition transaction should seek the guidance of qualified legal counsel to assist with the appropriate analysis.
McGrath North has counseled clients in a variety of industries through pre-acquisition filings pursuant to the HSR Act. For additional information, please contact David H. Roe (firstname.lastname@example.org) or Thomas M. Worthington (email@example.com).
1 If the acquired party is not engaged in manufacturing then annual net sales are irrelevant, and the acquired party must have more than $13.6 million in total assets to satisfy the “Size-of-Person” test