Thursday, December 28, 2017 10:03:40 AM
This might provide clues to amda future events as well as possible alignment of timing and accounting. I’m interested in other people’s read of HSR factors. All in my humble opinion of course.
Proposed Mergers, Acquisitions and Joint Ventures are reviewed by Department of Justice Justice (DOJ) & Federal Trade Commission (FTC).
Of specific interest are the “thresholds” that require a HSR filing. More specifically “size of persons Thresholds.” It appears that If AMDA is “small” enough, HSR may not have to be filed. Hence the 2017 shrinking assets quarter over quarter, constrained sales, adjustments to inventory tracking etc. These appear to align with zeroing in on HSR “threshold.” A lot depends on 4Q 2017 and 10-K. Perhaps a key to timing, since the year end accounting is essential for establishing “threshold” (Sales and total Assets from 10-k) Also might explain some of the accounting complexities of past few years.
Following document and p. 9-12 particularly useful :
https://www.ftc.gov/sites/default/files/attachments/premerger-introductory-guides/guide2.pdf
Threshold figures are adjusted upward each year. It appears that IF Amedica comes in at end of year 10K with less than 16.2m (as adjusted) Sales, AND less than 16.2m (as adjusted) total assets, AND the total merger deal comes in less than 325m (adjusted), then HSR filing may not be required.
This could limit/cancel exposure to required 30 day waiting period AND avoid government imposed conditions on merger that can force “divestiture” in particular business areas. For example see consent decree document below regarding Zimmer divestiture post biomes merger: (Boston made reference to this earlier)
https://www.ftc.gov/system/files/documents/cases/150624zimmeranalysis.pdf
Are there other possible advantages to not filing HSR?
Year end accounting has to be in place, limit to size of deal of 325m (as adjusted) has to be in place.
(but who knows, an announcement could come anytime). If warrants were activated that kicked money into amda this would have to come after year end books—only a few more days in 2017--in order to not increase total assets in 2017.
Searching “HSR” and “HSR thresholds” reveals lots of information. Also DOJ and FTC sites. A few links links:
https://www.ftc.gov/sites/default/files/attachments/premerger-introductory-guides/guide2.pdf
https://www.mayerbrown.com/public_docs/MergerReviewProcess.pdf
https://www.justice.gov/atr/horizontal-merger-guidelines-08192010
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/premerger-notification-and-merger
https://www.ecfr.gov/cgi-bin/text-idx?SID=0985c3db2db851a507d4d3c484fa7019&mc=true&node=pt16.1.801&rgn=div5#se16.1.801_111
https://www.ftc.gov/news-events/blogs/competition-matters/2017/08/getting-sync-hsr-timing-considerations
also Note: "as adjusted" means these actual number are much higher in 2017. hence 10m becomes 16m etc.
https://www.ftc.gov/enforcement/premerger-notification-program/hsr-resources/steps-determining-whether-hsr-filing
Steps for Determining Whether an HSR Filing is Required
Unless an exemption applies, premerger notification is required if your transaction meets three tests:
(1) the Commerce Test,
(2) the Size of Transaction Test, and
(3) the Size of Person Test.
The Commerce Test: If either party is engaged in commerce or in any activity affecting commerce, this test is met.
The Size of Transaction Test: The transaction must be valued at more than $50 Million (as adjusted).1 To determine the value of your transaction, go to Section V.A of Introductory Guide II, “To File or Not to File.”
If the transaction is valued at $50 million (as adjusted) or less, no filing is required.
If the transaction is valued at more than $200 million (as adjusted), and no exemption applies, an HSR filing must be made and parties must wait until the statutory waiting period has expired before closing the deal.
If the transaction is valued in excess of $50 million (as adjusted) but is $200 million (as adjusted) or less, only those transactions that also meet the size of person test require a filing.
The Size of Person Test: The parties to the transaction must meet certain size requirements if the transaction is valued in excess of $50 million (as adjusted) but is $200 million (as adjusted) or less. To determine the size of person, go to Sections V.B and V.C of Introductory Guide II, “To File or Not to File.”
If the transaction is valued in excess of $50 million (as adjusted) but is $200 million (as adjusted) or less, the size of person test is met, and no exemption applies, an HSR filing must be made and the parties must wait until the statutory waiting period has expired before closing the deal.
Exemptions: Even if your transaction meets the size of transaction test and, when necessary, the size of person test, an exemption may apply. To determine if an exemption applies, go to Section VI of Introductory Guide II, “To File or Not to File.”
glta and happy new year,
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