Question
(redacted)
January 7, 1983
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
Washington, D.C. 20580
Attention:Patrick Sharpe
Gentlemen:
We represent A, the ultimate parent entity of an acquiring person which, together
with its subsidiaries, is in the business of acquiring, owning, selling, leasing and managing
hotels, inns and hotel-casino throughout the United States. As of March 1, 1982, A
owned or leased and operated 17 hotels and managed 31 hotels partly or wholly-owned
by others. In addition, 173 hotels were operated under the name of A pursuant to
franchises granted by a subsidiary of A.
A has acquired an option to purchase all of the outstanding voting securities of
Z which, together with its wholly-owned subsidiary Y, owns the personal property and
the leasehold estate in real property comprising Hotel. Hotel, which is the only
operating asset of X and Y, is currently being managed by A. The ultimate parent
entity of X and Y is a foreign corporation, W. W, through it subsidiaries, is primarily
engaged in the businesses of insurance and various forms of real estate investment and
related activities.
The aggregate dollar value of the transaction would constitute substantially less
than 5% of the total assets of either the acquiring or the acquired person.
It is our position that the proposed acquisition should be exempt under Section
7A(c)(1) of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and Section 802.1
of the rules promulgated thereunder as an acquisition of goods or realty in the ordinary
course of business. (In this regard, we rely in part on Section 802.1(a) of the rules
since the sole operating asset of X and Y is the realty and related personality constituting
the Hotel.)
While we recognize that the premerger notifications staff has expressed the belief
that the acquisition of a hotel does not, necessarily, qualify under this exemption, we
believe that the particular facts of the proposed acquisition, i.e., the nominal dollar
value of the transaction compared to the total assets of the acquiring and acquired
persons, and the nature of the real estate activities of each of the parties to the
transaction, justify the conclusion that the acquisition of the voting securities of X
should be deemed an acquisition of goods or realty in the ordinary course of the
businesses of A and W within the meaning of this exemption.
Please contact the undersigned at your earliest convenience to advise us whether
the premerger notification staff concurs with our view on this matter.