The Premerger Notification Program also known as the Hart-Scott-Rodino Anti-trust Improvement Act 1976. An act of congress designed to give additional powers to the Justice Department and the Federal Trade Commission in order to reinforce their ability to act upon anti-competitive practices.
The Federal Premerger Notification Program was established by the Hart-Scott-Rodino Act of 1976. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 is also known as the “HSR Act” or Public Law 94-435. This provides the FTC and the Department of Justice with information about large mergers and acquisitions before they occur. Parties proposing certain transactions must submit premerger notification (Hart Scott Rodino Filing) to the FTC and DOJ. Premerger notification involves completing an HSR Form, entitled “Notification and Report Form for Certain Mergers and Acquisitions”. This form contains information about each company’s business. The parties may not close their deal until the appropriate waiting period under the HSR Act passes. This is the most important aspect of the act. In certain circumstances, the government may grant early termination of the waiting period. This period is normally 30 days but reduced for 15 days for a tender offer.
Hart-Scott-Rodino Filing and Merger Arbitrage Trading
Most mergers, especially those followed by Merger Arbitrage Limited require a HSR filing. This is because our spread tracker eligibility rules screens out smaller firms whose stock may not have sufficient liquidity for investment. These smaller firms may be exempt from a HSR filing requirement. The procedure is standard for companies and does not suggest there will be an issue with deal completion. If further information is required to complete the investigation, the merger arbitrage spread will tend to widen as the DCP declines and deal extension risk increases. However, this may not necessarily be the end of the deal.
See our Hart Scott Rodino (HSR) Filing – What All Traders Should Know! article for a complete overview such as tender offer filing timelines and advice for traders. Merger Arbitrage Limited produces a dedicated page with live updates of all HSR early termination notices. When these are issued, the firms are able to proceed and consummate the deal. Traders are advised to be aware of these updates as the target stock price can be affected dramatically.
