i cited that artiicle to you as general background on the subject of Morris trust and Reverse Morris trsut transactions. But it was written in 2001, before the very generous safe harbors and rules contained in the final 355(e) regulatioins came out. those regulations were promulgated in 2002 and a summary of them is in one of the other law firm memos I cited, http://www.willkie.com/files/tbl_s29Publications%5CFileUpload5686%5C2060%5CNew_Reg_Under_IRC_355.pdf
Prior to those regulations, the law was certainly less clear and I would have agreed with the summary of the law as stated by Sutherland.. For example, the Sutherland article describes the then proposed regulations, "Thus, the parties apparently can start talking and negotiating at any time after six months, so long as the acquisition is not consummated until after the 24-month mark." Now if there were no substantial discussions pre spin with the acquiror, the spin is not jeopardized under 355(e), as is illustrated by the example involving a "hot market" I quoted (the acquisitioin there occurs within 6 months).
I do agree that a post-spin transaction might, in some circumstances, contradict the claimed business purpose for the spin. But generally an unsolicited post spin bid is not going to have that effect. And even previously agreed on transactions that don't trigger 355(e) can be permitted, as evidenced by the fact that many of them in fact happen. P&G's spinoff of Folgers followed by a merger of Folgers with Smuckers is another example of a reverse morris trust transaction -- google Folgers and reverse Morris trust for a dozen descriptions.
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