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At a time when the total price for the transaction had been
fixed and the amounts to be allocated or assigned to various
aspects were being negotiated, the foreign investors’
representatives were concerned about the bona fides of the
transaction and that the amounts assigned to various assets were
properly determined for tax purposes. There was concern that the
focus had been on a $50 million cash infusion into DHL and not on
the price, value, and/or tax attributes of the trademark aspect
of the sale.
The DHL shareholders and their representatives were
concerned about the tax implications of selling the United States
and worldwide rights to the DHL trademark. DHL’s representatives
expressed the wish to the foreign investors’ representatives that
the amount received for the trademark be minimized. One
suggested approach to accomplish that was to form a Dutch holding
company. The new entity would transfer the foreign DHL trademark
rights to the holding company after purchasing them from DHL for
$10 million in return for a majority interest in the holding
company. DHL would also transfer the domestic DHL trademark
rights to the holding company in return for a minority interest.
The foreign investors did not agree to this approach, but they
would consider a new or other proposals. Detailed and protracted
negotiations ensued among the parties’ legal representatives, and
several alternatives were proposed and discussed.
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