If a listed company acquires another, for a "small" amount of money,
it does not have to register a filing with the SEC.

What is the threshold level in $ below which this can happen?

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Request for Question Clarification by pafalafa-ga on 06 Aug 2004 18:19 PDT

There are so many different types of acquisition scenarios
contemplated by the rules and regulations of the SEC, that it's
difficult to offer a general answer to your question.

However, it seems that the most relevant rule may be this language
below pertaining to whether an acquisition is considered "significant"
and thereby subject to reporting requirments:

==========

The amended rules provide that audited
financial statements of an acquired business should be furnished
for the most recent fiscal year if the significance of the
acquiree exceeds 20%, for the most recent two years if
significance exceeds 40%, and, except with respect to issuers
making offerings under Regulation S-B and acquired businesses
reporting annual revenues of less than $25 million, for the
latest three years if the significance exceeds 50%.  No financial
statements will be required for acquisitions below the 20%
significance threshold...

==========

The dollars-based financial threshold used here is annual revenues of
less than $25 million.


Does this look like the sort of SEC information that is relevant to
your question, or are you looking for some other kind of guidance?


P.S. Standard Google Answer warning:  we're not lawyers here, or
professional financial advisors...so make sure to seek professional
advice before acting on the information you receive here.

Let me know what you think.

pafalafa-ga

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Clarification of Question by macaonghus-ga on 08 Aug 2004 02:17 PDT

Ok thats good and I will accept that as part of the answer but I am
not clear on the implications of the paragraph you pasted:

"statements ... should be furnished ... if the significance of the
acquiree exceeds 20%"- 20% of what? If the revenues are above 25
million and the significance is under 20% then no statements are
needed? but 20% of what? that the acquiree's revenues must be under
20% of the acquirer's revenues?

What you appear to be concerned with is whether or not you have to
file a Form 8-K with the SEC disclosing an acquisition.  The rules
have been recently revised.  The following rule goes into effect on
August 23, 2004.

"Item 2.01 Completion of Acquisition or Disposition of Assets
This item retains most of the substantive requirements included in
former Item 2 of Form 8-K. It requires disclosure if a company, or any
of its majority-owned subsidiaries, has acquired or disposed of a
significant amount of assets, otherwise than in the ordinary course of
business.
We recognize that there will frequently be a relationship between the
disclosure provided under this item and the disclosure required by new
Item 1.01, "Entry into a Material Definitive Agreement." Typically, a
company will report its entry into a material definitive agreement to
acquire or dispose of assets under Item 1.01, and then later disclose
the closing of the acquisition or disposition transaction under Item
2.01. However, a company will not necessarily be required to provide
the Item 2.01 disclosure regarding every material definitive
acquisition or disposition agreement disclosed under Item 1.01 as Item
2.01 includes a bright-line reporting threshold that is not included
in Item 1.01. Under this threshold, a company need only report a
completed acquisition or disposition of assets if the transaction
meets the significant asset test as set forth in the item.57"

"Expansion of Form 8-K Items" Securities and Exchange Commission
http://www.sec.gov/rules/final/33-8400.htm#seciic

"57 This test is the same as the test in former Item 2 of Form 8-K. It
states that an acquisition or disposition is deemed significant if (1)
the company's and its other subsidiaries' equity in the net book value
of the assets or the amount paid or received for the assets exceeded
10% of the total assets of the company and its consolidated
subsidiaries, or (2) the transaction involved a business that is
significant under Regulation S-X."

"57" Securities and Exchange Commission
http://www.sec.gov/rules/final/33-8400.htm#P205_31955
The relevant portion of Regulation S-X can be found at "Financial
Statements of Businesses Acquired or to be Acquired Reg. § 210.3-05"
Securities and Exchange Commission
http://www.sec.gov/divisions/corpfin/forms/regsx.htm.  The previous
researcher, pafalafa, has provided you with a portion of the text.

Based on section (w) of  "Definition of Terms Used in Regulation S-X
(17 CFR Part 210) Reg. § 210.1-02."  Securities and Exchange
Commission http://www.sec.gov/divisions/corpfin/forms/regsx.htm#terms,
the percentages referenced relate to the acquiring company's total
assets.  This agrees with the metric discussed in "57" above.

Search Terms: 
acquisition 8-K SEC rule
Regulation S-X

Sincerely,

Wonko

The answer was fine but it was a paste of a lot of legal jargon that I
did not really understand, and did not leave me confident that I knew
what the figure I wanted was. I would have appreciated a plain English
summary and a clearer answer.