A Narrowing Of The HSR Investment-Only Exemption

Law360, New York (September 9, 2015, 10:11 AM EDT) -- The proposed antitrust settlement with Third Point LLC and its affiliates for violations of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended offers guidance to investors seeking to navigate the morass between passive investment and activism. Under the investment-only exemption, acquisitions that result in holding 10 percent or less of an issuer's outstanding voting securities are exempt — even where the value exceeds the $76.3 million "size of transaction" threshold of the act — so long as the investor acquires the shares "solely for the purpose of investment." Particularly challenging, however, is determining what constitutes "solely for the purpose of investment" for those who intend to take some action beyond holding and voting their shares — seeking to maintain the value of their investment while not foreclosing the availability of the exemption by becoming "activist."...

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