2021 HSR Filing Thresholds: Timelines for M&A Closings After FTC Changes
The filing thresholds and timelines for the Hart-Scott-Rodino Act (HSR) have undergone two key changes in 2021: (1) the HSR filing thresholds have been reduced; and (2) there has been a temporary suspension of the early termination of the statutory waiting period. Below we discuss these 2021 changes to the HSR filing thresholds.
Reduced HSR Filing Thresholds
The HSR requires parties to certain transactions to notify the Federal Trade Commission (FTC) and Department of Justice (DOJ) of a deal and then wait for a specified holding period before closing. During this holding period, the agencies evaluate and determine how a transaction will affect competition in the market. The FTC must revise threshold amounts annually to adjust for changes in gross national product. Since the last year has brought a decrease in production, the FTC has decreased thresholds for 2021. The decreased thresholds took effect on March 4, 2021. The FTC has also temporarily suspended the option for early termination of the statutory waiting period.
Unless an exemption applies, certain holdings in excess of the size-of-transaction and size-of-person thresholds set forth below may be reportable to the U.S. antitrust authorities. The threshold values have decreased from the 2020 threshold amounts, and transactions valued at more than $92 million but less than $368 million must meet the “size of person” test, and those transactions valued in excess of $368 million will be automatically reportable unless an exemption applies.
The size-of-person test is satisfied where the ultimate parent entity (UPE) as defined under the Act, has total assets or annual net sales of $184 million or more, and the UPE of the secondary party has total assets or annual net sales of $18.4 million or more.
Size of Transaction | ||
Base | 2020 | 2021 |
$50 million | $94 million | $92 million |
$200 million | $376 million | $368 million |
Transactions valued at more than $92 million but $368 million or less must also meet the “size of person” test. |
Size of Person | ||
Base | 2020 | 2021 |
$10 million | $18.8 million | $18.4 million |
$100 million | $188 million | $184 million |
Voting Securities | ||
Base | 2020 | 2021 |
$50 million | $94 million | $92 million |
$100 million | $188 million | $184 million |
$500 million | $940.1 million | $919.9 million |
$1 billion (if acquiring 25%) | $1.8802 billion | $1.8398 billion |
The new thresholds will not affect the amount of filing fees due under the HSR Act. However, applicable fees will be based on the new thresholds, as follows:
HSR Filing Fees | |
Transactions valued at less than $184 million | $45,000 |
Transactions valued at $184 million or more but less than $919.9 million | $125,000 |
Transactions valued at $919.9 million or more | $280,000 |
*Data from https://www.ftc.gov/news-events/blogs/competition-matters/2021/02/hsr-threshold-adjustments-reportability-2021
Temporary Suspension of Early Termination
Parties looking to request an early termination of the statutory waiting period (30 days) must file an HSR notification in the Early Termination program. Organizations that qualify for Early Termination, and do not present risks to competition, can proceed with the merger or acquisition before the 30-day waiting period. Of the 75% who requested Early Termination, 75% were accepted (in fiscal year 2019), according to the FTC and DOJ.
Baer Reed works with organizations to support the Merger and Acquisition due diligence process. Contact us today to see how we can be of service.
- On August 25, 2021
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