Beginning in late February 2010, transactions will be subject to new, lower reporting thresholds under the Hart-Scott-Rodino Act (the “HSR Act”) than those that were in effect during 2009. On Jan. 19, 2010, the Federal Trade Commission (“FTC”) announced revised reporting thresholds under which transactions will be reportable only if, as a result of such transaction, the acquiring person will hold voting securities, assets, or noncorporate interests of the acquired person valued above $63.4 million, compared to $65.2 million in 2009. The new adjusted thresholds will apply to all transactions that close on or after the effective date, which is expected to be in late February.
The HSR Act’s jurisdictional thresholds are revised annually based on the change in gross national product, and this is the first time the revisions have not increased the adjusted thresholds. The revised HSR thresholds are set forth here.
Corresponding increases will also apply to certain other thresholds and exemptions under the HSR Act. However, the FTC has not announced any increases to the filing fees applicable to reportable transactions. Therefore, under the revised thresholds, the applicable filing fees will be as here.
For a reportable transaction, the acquiring person’s holdings must cross the threshold with respect to which the HSR notification is made within one year of the expiration or early termination of the HSR waiting period. Since the thresholds are being adjusted downward, the acquiring person’s holdings need only meet the new, lower threshold during the first year after expiration or early termination of the waiting period.
Once the acquiring person has crossed the applicable threshold during the first year, any additional acquisitions by the same acquiring person of same issuer’s voting securities will be exempt from notification during the five years following the expiration or early termination of the HSR waiting period, until a higher notification threshold is met or exceeded. For purposes of this exemption, any subsequent acquisition by the acquiring person would be subject to the adjusted thresholds in effect when the subsequent acquisition is consummated. Therefore, until the thresholds are revised again, the exemption for subsequent acquisitions that were previously notified will be subject to the lower adjusted 2010 thresholds.
There are many complex and technical coverage requirements and exemptions under the HSR Act. Accordingly, the advice of counsel must be sought to determine the applicability of the HSR Act’s filing requirements to particular situations.