National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from prospectus requirements to allow U.S. parent company to spin off shares of its U.S. subsidiary to investors -- distributions not covered by legislative exemptions -- U.S. parent company is a public company in the U.S. but is not a reporting issuer in Canada -- U.S. company has a de minimis presence in Canada -- following the spin off, U.S. subsidiary will become an independent public company in the I.S. and will not be a reporting issuer in Canada -- no investment decision required from Canadian shareholders in order to receive distributions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 53.
July 29, 2014
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF AGILENT TECHNOLOGIES, INC. (the "Filer")
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (the "Legislation") for an exemption (the "Exemption Sought") from the prospectus requirements contained in the Legislation in connection with the distribution (the "Spin-Off") by the Filer of the shares of common stock of Keysight Technologies, Inc. ("Keysight"), a direct wholly-owned subsidiary of the Filer, by way of dividend in specie to holders ("Filer Shareholders") of shares of common stock of the Filer ("Filer Shares") resident in Canada ("Filer Canadian Shareholders").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filer has provided notice that Section 4.7(1) of Multilateral Instrument 11-102 -- Passport System ("MI 11-102") is intended to be relied upon in each of the other provinces and territories of Canada.
Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer.
1. The Filer is a corporation incorporated in Delaware with principal executive offices in Santa Clara, California, U.S.A.. The Filer is a measurement company providing core bio-analytical and electronic measurement solutions to the life sciences, diagnostics and genomics, chemical analysis, communications and electronics industries.
2. The Filer is not a reporting issuer under the securities laws of any province or territory of Canada and, currently, has no intention of becoming a reporting issuer under the securities laws of any province or territory of Canada.
3. The authorized capital of the Filer consists of 2 billion Filer Shares and 125 million shares of preferred stock. As at April 30, 2014, 333,260,909.8 Filer Shares were issued and outstanding and no shares of preferred stock were issued and outstanding.
4. Filer Shares are listed on the New York Stock Exchange (the "NYSE") and trade under the symbol "A". Filer Shares are not listed on any Canadian stock exchange and, currently, the Filer has no intention of listing its shares on any Canadian stock exchange.
5. The Filer is subject to the 1934 Act and the rules, regulations and orders promulgated thereunder.
6. Based on a "Geographic Breakdown Snapshot" of registered holders provided by Computershare Investor Services (the Filer's transfer agent) obtained by the Filer, as of June 5, 2014, there were 228 registered Filer Canadian Shareholders holding approximately 24,428 Filer Shares, representing approximately 9.43% of the registered shareholders of the Filer worldwide and holdings of approximately 0.0073% of the outstanding Filer Shares as of such date. The Filer does not expect these numbers to have materially changed since that date.
7. Based on a "Geographic Survey" of beneficial holders provided by Georgeson, Inc. obtained by the Filer, as of January 21, 2014, there were 68 beneficial Filer Canadian Shareholders holding approximately 3,177,568 Filer Shares, representing approximately 0.55% of the beneficial holders of Filer Shares worldwide and holdings of approximately 0.95% of the outstanding Filer Shares as of April 30, 2014. The Filer does not expect these numbers to have materially changed since those dates.
8. Based on the information above, the number of registered and beneficial Filer Canadian Shareholders and the proportion of Filer Shares held by such shareholders is de minimis.
9. The Filer is proposing to spin off its electronic measurement products business into a newly formed independent company, Keysight, through a series of transactions. These transactions are expected to result in the Spin-Off by the Filer, pro rata to its shareholders of all of the shares in the common stock of Keysight (the "Keysight Shares"), which will be 100% of the Keysight Shares outstanding immediately prior to such distribution.
10. Keysight is a Delaware corporation with principal executive offices in Santa Rosa, California. It is currently a wholly-owned subsidiary of the Filer that, at the time of the Spin-Off, will hold the Filer's electronic measurement business.
11. As of the date hereof, all of the issued and outstanding Keysight Shares are held by the Filer, and no other stock of Keysight are issued and outstanding.
12. Fractional shares of Keysight Shares will not be distributed in connection with the Spin-Off. A distribution agent will aggregate the amount of fractional shares that would otherwise have been distributed into whole shares of Keysight and will sell such shares into the public market at then prevailing market prices and distribute the cash proceeds in U.S. Dollars (net of any applicable transfer taxes and the costs and expenses of such sale and distribution). The distribution agent will distribute such net proceeds pro rata to each Filer Shareholder who would otherwise have been entitled to receive a fractional share of Keysight.
13. Filer Shareholders will not be required to pay for the Keysight Shares, or to surrender or exchange Filer Shares or take any other action to be entitled to receive their Keysight Shares. The Spin-Off will occur automatically and without any investment decision on the part of Filer Shareholders.
14. Following the Spin-Off, Keysight will cease to be a subsidiary of the Filer.
15. Keysight will apply to have the Keysight Shares listed on the NYSE before the Spin-off.
16. After the completion of the Spin-off, the Filer will continue to be listed and traded on the NYSE.
17. Keysight is not a reporting issuer in any province or territory in Canada nor are its securities listed on any stock exchange in Canada. To the knowledge of the Filer, Keysight has no intention to become a reporting issuer in any province or territory in Canada or to list its securities on any stock exchange in Canada after the completion of the Spin-Off.
18. The Spin-Off will be effected under the laws of the State of Delaware.
19. Because the Spin-Off will be effected by way of a dividend of Keysight Shares to Filer Shareholders, no shareholder approval of the proposed transaction is required (or being sought) under Delaware law.
20. In connection with the Spin-Off, Keysight filed with the SEC a registration statement on Form 10 under the 1933 Act on March 5, 2014, detailing the proposed Spin-Off and subsequently filed amendments to the registration statement on April 18, 2014 and May 23, 2014 (as subsequently amended, restated and supplemented, the "Registration Statement").
21. After the SEC has completed its review of the Registration Statement, Filer Shareholders will receive a copy of an information statement (the "Information Statement") forming part of the Registration Statement. All materials relating to the Spin-Off sent by or on behalf of the Filer and Keysight in the United States (including the Information Statement) will be sent concurrently to Filer Canadian Shareholders.
22. The Information Statement will contain prospectus level disclosure about Keysight.
23. Filer Canadian Shareholders who receive Keysight Shares as a dividend pursuant to the Spin-Off will have the benefit of the same rights and remedies in respect of the disclosure documentation received in connection with the Spin-Off that are available to Filer Shareholders resident in the United States.
24. Following the completion of the Spin-Off, Keysight will send concurrently to Keysight Shareholders resident in Canada the same disclosure materials required to be sent under applicable U.S. laws to Keysight Shareholders resident in the United States.
25. There will be no active trading market for the Keysight Shares in Canada following the Spin-Off and none is expected to develop. Consequently, it is expected that any resale of Keysight Shares distributed in connection with the Spin-Off will occur through the facilities of the NYSE.
26. The Spin-Off to Filer Canadian Shareholders would be exempt from the Prospectus Requirements pursuant to subsection 2.31(2) of NI 45-106 but for the fact that Keysight is not a reporting issuer under the securities legislation of any jurisdiction in Canada.
27. Neither the Filer nor Keysight is in default of any securities legislation in any jurisdiction of Canada.
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the first trade in the Keysight Shares acquired pursuant to the Spin-Off will be deemed to be a distribution unless the conditions in Section 2.6 or subsection 2.14(1) of National Instrument 45-102 -- Resale of Securities are satisfied.