[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR802.4]

[Page 605]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 802_EXEMPTION RULES--Table of Contents
 
Sec. 802.4  Acquisitions of voting securities of issuers holding 
certain assets the direct acquisition of which is exempt.

    (a) An acquisition of voting securities of an issuer whose assets 
together with those of all entities it controls consist or will consist 
of assets whose purchase would be exempt from the requirements of the 
act pursuant to Section 7A(c)(2) of the act, Sec. 802.2, Sec. 802.3 or 
Sec. 802.5 of these rules is exempt from the reporting requirements if 
the acquired issuer and all entities it controls do not hold other non-
exempt assets with an aggregate fair market value of more than $50 
million.
    (b) As used in paragraph (a) of this section, issuer means a single 
issuer, or two or more issuers controlled by the same acquired person.
    (c) In connection with paragraph (a) of this section and Sec. 
801.15 (b), the value of the assets of an issuer whose voting securities 
are being acquired pursuant to this section shall be the fair market 
value, determined in accordance with Sec. 801.10(c).

    Examples: 1. ``A,'' a real estate investment company, proposes to 
purchase 100 percent of the voting securities of C, a wholly-owned 
subsidiary of ``B,'' a construction company. C's assets are a newly 
constructed, never occupied hotel, including fixtures, furnishings and 
insurance policies. The acquisition of the hotel would be exempt under 
Sec. 802.2(a) as a new facility and under Sec. 802.2(d). Therefore, 
the acquisition of the voting securities of C is exempt pursuant to 
Sec. 802.4(a) since C holds assets whose direct purchase would be 
exempt under Sec. 802.2 and does not hold non-exempt assets exceeding 
$50 million in value.
    2. ``A'' proposes to acquire 60 percent of the voting securities of 
C from ``B.'' C's assets consist of a portfolio of mortgages valued at 
$55 million and a small manufacturing plant valued at $26 million. The 
manufacturing plant is an operating unit for purposes of Sec. 802.1(a). 
Since the acquisition of the mortgages would be exempt pursuant to 
Section 7A(c)(2) of the act and since the value of the non-exempt 
manufacturing plant is less than $50 million, this acquisition is exempt 
under Sec. 802.4(a).
    3. ``A'' proposes to acquire from ``B'' 100 percent of the voting 
securities of each of three issuers, M, N and O, simultaneously. M's 
assets consist of oil reserves worth $160 million and coal reserves 
worth $40 million. N has assets consisting of $130 million of gas 
reserves and $100 million of coal reserves. O's assets are oil shale 
reserves worth $140 million and a coal mine worth $80 million. Since 
``A'' is simultaneously acquiring the voting securities of three issuers 
from the same acquired person, it must aggregate the assets of the 
issuers to determine if any of the limitations in Sec. 802.3 is 
exceeded. As a result of aggregating the assets of M, N and O, ``A's'' 
holdings of oil and gas reserves are below the $500 limitation for such 
assets in Sec. 802.3(a). However, the aggregated holdings exceed the 
$200 million limitation for coal reserves in Sec. 802.3(b). ``A's'' 
acquisition therefore is not exempt, and it must report the entire 
transaction.

[61 FR 13688, Mar. 28, 1996, as amended at 66 FR 8693, Feb. 1, 2001]