Private equity firms stand to be particularly exposed to a new FTC requirement that companies get agency approval before flipping certain assets.
The Federal Trade Commission’s rule change requires companies to get agency approval for at least 10 years before they can resell assets bought from merging companies that sold them as the agency’s condition for merger approval. The requirement would apply regardless of the divested asset’s size.
Under the Hart-Scott-Rodino Act, companies that buy other companies for more than $92 million need to subject the deal to DOJ or FTC review for whether it would harm competition. The agencies can issue an approval with a condition that certain assets be sold to relieve its competition concerns.
The FTC approved Linde AG’s $83 billion merger with Praxair in 2019, on the condition that certain assets be divested to a private equity-backed firm.
Read more/Source: Bloomberg Law
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