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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Scott Heaton who wrote (38945)	2/4/2000 5:30:00 PM
From: The Phoenix	Read Replies (2) \| Respond to of 45548

I'm not sure who Gary Brack is but there are a couple of issues I could use some clarification on. Further, these businesses must each have been actively conducted throughout the five-year period ending on the date of the spinoff and must not have been acquired, within that period, in a wholly or even partially taxable transaction. COMS acquistion of PALM via USRX already breaks this rule but he goes on to say that COMS would get favorable tax treatment anyway. I don't see how... this is an AND not an OR. BUT.. here's the real issue or claim that Gary is making. However, to qualify for pooling, there can be no "intention or plan" to dispose of a significant portion of the assets of either combining company within two years after the combination, other than disposals in the ordinary course of business or to eliminate duplicate facilities or excess capacity. Although, at least theoretically, a disposal occurring within the two-year, post-transaction period might not be fatal-since the combined corporation could always argue that the disposal was prompted by an unanticipated change -most corporations that have structured a pooling will decline to shoulder this daunting evidentiary burden. This is the pooling rule. That a corporation can not divest assets of an aquired company within the first two years. There are a number of issues to be addressed here...which I'll save for another time. Why? Because pooling only has to do with aquisitions. That is a company buying COMS could not divest a part of COMS for two years. It doesn't mean that COMS can sell or seek a suitor or even announce that they've been bought starting the day after spin off. Two other quick points. - pooling only applies to acquisition using stock not cash - anti-trust issues take precedent. That is if Intel bought COMS with stock they would likely be required to divest the NIC business. This would not be a taxable transaction since this would fall under anti-trust law. OG