UNITED STATES OF AMERICA 

BEFORE FEDERAL TRADE COMMISSION 

PUBLIC VERSION 

COMMISSIONERS: Edith Ramirez, Chairwoman 

Julie Brill 

In the Matter of 

Maureen K. Ohlhausen 

Joshua D. Wright 

Docket No. 9327 

POLYPORE INTERNATIONAL, INC., 

a corporation. 

) 

) 

) 

) 

) 

APPLICATION FOR APPROVAL OF THE DIVESTITURE OF MICROPOROUS 

FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP 

801 17th Street, NW 

Washington, DC 20006 

Counsel for Polypore International, Inc. 
PUBLIC VERSION 

TABLE OF CONTENTS 

Page 

I. RELEVANT BACKGROUND ........................................................................................... 3 

II. DESCRIPTION OF THE DIVESTITURE ......................................................................... .4 

III. THE DIVESTITURE AGREEMENTS FULFILL THE TERMS AND 

PURPOSES OF THE ORDER ............................................................................................ 6 

A. Transfer of the Microporous Assets ............................................................................ 6 

B. Other Ancillary Relief. ................................................................................................ ? 

IV. POL YPORE EXTENSIVELY MARKETED MICROPOROUS, WITH THE 

PROFESSIONAL ASSISTANCE OF WELLS FARGO SECURITIES, LLC 

("WELLS FARGO"), BEFORE SELECTING SEVEN MILE AS THE 

DIVESTITURE BUYER ................................................................................................... l3 

V. SEVEN MILE IS A WELL-QUALIFIED BUYER AND IS READY, WILLING 

AND ABLE TO OPERATE MICROPOROUS AS A VIABLE, INDEPENDENT, 

AND EFFECTIVE COMPETITOR ............ ...................................................................... 14 

A. Seven Mile Has The Financial Capability And Incentives To Acquire And 

Operate Microporous As An Independent Competitor ............................................. 14 

B. Seven Mile Has The Competitive Ability To Restore Competition In The 

Relevant Markets ............................. ......................................................................... 16 

VI. THE PROPOSED DIVESTITURE WILLFULLY RESTORE COMPETITION 

AND WILL ACHIEVE THE REMEDIAL PURPOSES OF THE ORDER ............... ...... l9 

A. Piney Flats and Feistritz ............................................................................................ 20 

B. Intellectual Property ....................................................................................... ........... 20 

C. Technical and Transition Services Agreements ........................................................ 21 

D. Customers ................................................................................................................. 21 

E. Increased Competition .............................................................................................. 22 

VII. REQUEST FOR EXPEDITIOUS APPROVAL. ............................................................... 23 

VIII. REQUEST FOR CONFIDENTIAL TREATMENT ......................................................... 24 
PUBLIC VERSION 

Index of Annexes 

Annex 1 Stock Purchase Agreement 

Annex 2 Disclosure Schedules (Confidential) 

Annex 3 Transition Services Agreement (Confidential) 

Annex 4 Technical Services Agreement (Confidential) 

Annex 5 Shared Intellectual Property License Agreement (Confidential) 

Annex 6 Supply Agreement (Confidential) 

Annex 7 Share Transfer Agreement (Confidential) 

Annex 8 Seven Mile Financing Commitment Papers (Confidential) 

Annex 9 Microporous Employees to Whom a Retention Bonus Will be Paid (Confidential) 

Annex 10 Seven Mile's Full Name and Address 

Annex I 1 Seven Mile's Proposed Officers and Directors 

Annex 12 Seven Mile's Business Description 

Annex 13 Seven Mile Representatives to Whom Divestiture Questions Should be Addressed 

Annex 14 Seven Mile's Most Recent Financial Statements (Confidential) 

Annex 15 Transactions between Polypore and Seven Mile 

: 
PUBLIC VERSION 

Introduction 

Pursuant to Section 2.41 (f) of the Federal Trade Commission (the "FTC" or 

"Commission") Rules of Practice and Procedure, 1 and ~ ll of the Decision and Order issued by 

the Commission in this matter as of November 5, 2010 (the "Order"), 2 Polypore International, 

Inc. ("Polypore" or the "Respondent") hereby petitions the Commission to approve the 

divestiture of Microporous, which is comprised of all of the outstanding capital stock of MP 

Assets Corporation ("MP Assets Corp.") and the rights, title, and interest in the entire business 

quota in Separatorenerzeugung Holding GmbH ("Separator Holding GmbH") (collectively, the 

"Shares"), to Seven Mile Capital Partners ("Seven Mile"), pursuant to the following agreements 

(the "Divestiture Agreements"): 

(i) Stock Purchase Agreement, to be dated and entered into prior to the 

Commission's approval of the divestiture between Daramic Acquisition Corp. 

("Daramic") (a subsidiary of Polypore), Polypore BV (a subsidiary of Polypore), 

Polypore International, Inc. (solely for purposes of Section 11.18), Seven Mile 

Capital Partners Top, Inc. and SASR Zweiundflinfzigste Beteiligungsverwaltung 

GmbH (the "Agreement"), and related disclosure schedules, the agreed upon 

forms of which are attached as Annexes 1 and 2; 

(ii) Transition Services Agreement, to be dated as of and entered into on the date of 

divestiture ("Closing Date"), the agreed upon form of which is attached as Annex 

3· ' 

16 C.F.R. § 2.4l(t). 

Capitalized terms used, but not otherwise defmed, herein have the meaning set forth in the Final Order, In 

the Matter of Polypore International, Inc. (Nov. 5, 20 I 0), hereinafter the "Order." 
PUBLIC VERSION 

(iii) Technical Services Agreement, to be dated as of and entered into on the Closing 

Date, the agreed upon form of which is attached as Annex 4; 

(iv) Shared IP License Agreement, to be dated as of and entered into on the Closing 

Date, the agreed upon form of which is attached as Annex 5; and 

(v) Supply Agreement, to be dated as of and entered into on the Closing Date, the 

agreed upon form of which is attached as Annex 6; and 

(vi) Share Transfer Agreement to be dated as of and entered into on the Closing Date, 

the agreed upon form of which is attached as Annex 7. 

The proposed divestiture of Microporous to Seven Mile would fully accomplish the 

Order's objectives by "creat[ing] an independent, viable and effective competitor in the markets 

in which Microporous was engaged at the time of the Acquisition Date, and remedy[ing] the 

lessening of competition resulting from the Acquisition" as alleged by the Commission.3 

Specifically, by divesting Microporous, as contemplated by the Order, to Seven Mile, the 

Relevant Markets will gain a significant competitor. As explained in greater detail below, Seven 

Mile is a particularly suitable purchaser for Microporous. Seven Mile has the financial and 

professional capability and incentives to operate Microporous as an effective competitor in the 

Relevant Markets. Additionally, Seven Mile has the competitive ability to restore and maintain 

competition to the Relevant Markets. 

Order, ~II. H. The Commission found that Polypore's acquisition of Microporous was reasonably likely to 

substantially lessen competition in three relevant markets: North American deep-cycle, motive and starter, 

lighting, and ignition ("SLI") battery separators (collectively referenced in this Application as the 

"Relevant Markets"). Opinion of the Commission, In the Matter of Polypore International, lnc. (FTC 

Docket No. 9327), hereinafter the Opinion. Although Polypore disagreed with the fmdings of the 

Commission, for the purposes of this Application, Polypore uses the Commission's market definition and 

findings regarding competitive effects of the Acquisition in the Opinion. 

2 
PUBLIC VERSION 

For the reasons set forth above, and as explained in greater detail below, Polypore 

respectfully requests that the Commission approve the proposed divestiture of Microporous to 

Seven Mile. 

I. RELEVANT BACKGROUND 

On February 29, 2008, Polypore, a Delaware corporation located in North Carolina, 

acquired all of the outstanding stock of Microporous, a Delaware corporation owned by a private 

equity firm, Industrial Growth Partners II L.P. (the "Acquisition"). Through the transaction, 

Polypore acquired a plant in Piney Flats, Tennessee ("Piney Flats"); a plant under construction in 

Feistritz, Austria ("Feistritz"); and equipment for an additional production line (the "Line in 

Boxes")4

, which are collectively referred to as the "Microporous Assets." 

The Commission challenged Polypore's acquisition of Microporous as a violation of 

Section 7 of the Clayton Act, 15 U.S.C. § 18 and, on November 5, 2010, the Commission 

ordered Polypore to divest completely the Microporous Assets to a buyer that receives the prior 

approval of the Commission. 

5 On July 11, 2012, the 11th Circuit Court of Appeals denied 

Polypore's appeal of the Commission's Order, and on October 17, 2012, the 11th Circuit Court 

of Appeals denied Polypore's Petition for Rehearing. On Monday, June 24, 2013, the Supreme 

Court of the United States denied Polypore's Writ of Certiorari to review the 11th Circuit's 

ruling. 

5 

The Order defines the Line in Boxes to include: "all property and assets, tangible and intangible, related to 

capacity expansions proposed, planned or under consideration by Microporous as of the Acquisition Date, 

including, but not limited to, all engineering plans, equipment, machinery, tooling, spare parts, and other 

tangible property, wherever located, relating to a proposed, planned or contemplated capacity expansion to 

be accomplished through installation of an additional Battery Separator production line at Piney Flats 

Plant." Order, ~ I. Y. 

Order,~ ll. 

3 
PUBLIC VERSION 

Beginning in October of 2012, Polypore actively engaged in a good faith effort to divest 

itself of Microporous, as required by the Order. 

ll. DESCRIPTION OF THE DIVESTITURE 

Following the Acquisition, Polypore held the Microporous Assets through MP Assets 

Corp., Separator Holding GmbH, and each of their respective subsidiaries. Structure Chart A 

below demonstrates the Microporous Assets within Polypore's post-Acquisition corporate 

organization. 

I Polypon International, Inc. (DE) 

~ ) 

Daramic Acquisition 

----

Corp. 

---Polypore CV 

(DE) (Netherlands) 

I I 

MP Assets Polypon BV Corporation 

(DE) (Netherlands) 

Putty Flats, TN 

Plaxtt I 

Separ.stor Holdiltg GmbH 

Microporous (Austria) 

Holdiltg, LLC (DE) I 

I Daramk Austria GmbH 

Dararnic 

Holdiltg, LLC Feistrib:, Austria Plant 

(DE) 

I 

Microporous 

Products, LLC 

(DE) 

The Agreement achieves a complete divestiture of the Microporous Assets to Seven Mile. 

The purchase price for the Microporous Assets is $.million. For purposes of the divestiture, 

Seven Mile has formed Seven Mile Capital Partners Top, Inc. ("U.S. Buyer") and SASR 

4 
6 

PUBLIC VERSION 

Zweiundftinfzigste Beteiligungsverwaltung GmbH ("Austrian Buyer"), two new entities to hold 

the Micro porous Assets after the Closing Date. Section 2.1 of the Agreement conveys all of the 

outstanding capital stock of MP Assets Corp. to U.S. Buyer, and the rights, title, and interest in 

the entire business quota in Separator Holding GmbH to Austrian Buyer.6 Structure Chart B 

below demonstrates the corporate structure of the Microporous Assets within Seven Mile's 

corporate organization post-divestiture. 

Seven Mile Capital 

Partners Top, Inc. • 

US Top Co 

[Name TBDJ 

US Buyer 

!Name TBDJ 

MPAssets Corporation 

IUS target] 

(Delaware) 

~May be a Luxembourg SARL 

SASR 0 reiundf Onf zig ste 

Beteilig ung sv erwaltung 

GmbH 

(Austria) 

SASR Zweiundfunfzigste 

Beteiligung sv erwaltung 

GmbH 

(Austria) 

Sep aratorenerzeug ung 

Hold ing GmbH 

[Austrian target] 

The business quota of Separator Holding GmbH will be transferred to Seven Mile pursuant to a share 

transfer agreement referenced by Section 2.4 of the Agreement. Other than in relation to the legal transfer 

of the quota in Separator Holding GmbH, the Agreement supersedes and governs in all respects. 

5 
PUBLIC VERSION 

III. THE DIVESTITURE AGREEMENTS FULFILL THE TERMS AND PURPOSES 

OF THE ORDER 

A. Transfer of the Microporous Assets 

Paragraph II.A of the Order requires Polypore to divest Microporous, which ~ I.AA of the 

Order defines to include: 

All of Respondent's rights, title and interest in and to the following property and assets, 

tangible and intangible, wherever located, and any improvements, replacements or 

additions thereto that have been created, developed, leased, purchased, or otherwise 

acquired by Respondent after the Acquisition Date, relating to the research, development, 

manufacture, finishing, packaging, distribution, marketing, or sale of Microporous 

Battery Separators: 

(a) Piney Flats; 

(b) F eistritz; 

(c) the Line in Boxes; 

(d) Micro porous Intellectual Property; 

(e) Contracts; 

(£) Books and Records; and 

(g) All rights to use Shared Intellectual Property pursuant to a Shared 

Intellectual Property License. 

1. Piney Flats and Feistritz 

The Agreement conveys Piney Flats to Seven Mile. As indicated by Structure Chart A 

above, MP Assets Corp. holds Piney Flats. Section 2.1 of the Agreement conveys MP Assets 

Corp. to U.S. Buyer, and accordingly, conveys Piney Flats to Seven Mile. 

The Agreement conveys Feistritz to Seven Mile. As indicated by Structure Chart A 

above, Separator Holding GmbH holds Daramic Austria GmbH. Daramic Austria GmbH holds 

Feistritz. Section 2.1 of the Agreement conveys Separator Holding GmbH to Austrian Buyer, 

and accordingly, conveys Feistritz to Seven Mile. 

6 
PUBLIC VERSION 

2. Line in Boxes 

Prior to the Acquisition, Microporous had initiated the design and planning for the 

additional line, but no work was done to install the line. Since the Acquisition, Polypore has 

maintained the Line in Boxes in accordance with the Order. The Line in Boxes will transfer to 

Seven Mile as part of the divestiture, pursuant to Section 2.1 of the Agreement, which conveys 

MP Assets Corp. and Separator Holding GmbH to Seven Mile. 

3. Microporous Intellectual Property 

Schedule 3.13 of the Agreement lists all registered Microporous Intellectual Property, 

and each pending application therefor. Section 3.13 of the Agreement acknowledges that 

Microporous owns all rights, title, and interest in and to Microporous Intellectual Property, and 

has the valid right to use all other Business Intellectual Property, which is defined to include all 

Intellectual Property owned or used by Microporous. 

4. Contracts 

Since Seven Mile is purchasing the stock of the Microporous entities, the Contracts will 

transfer with the sale. To the extent consents are required for transfer of the Contracts, Section 

5.3(d) requires Sellers (as defined in the Agreement) to obtain such consents. 

5. Books and Records 

The Microporous Books and Records will transfer to Seven Mile as part of the 

divestiture, pursuant to Section 2.1 of the Agreement, which conveys MP Assets Corp. and 

Separator GmbH to Seven Mile. 

B. Other Ancillary Relief 

1. Micro porous Assets, Fixtures, Tangible Personal Property 

Paragraph C.l of the Order requires Polypore to restore to Microporous any Microporous 

Assets as of the Acquisition Date that were removed from Microporous at any time from the 

7 
PUBLIC VERSION 

Acquisition Date through Closing, other than Battery Separators sold in the ordinary course of 

business and Inventories consumed in the ordinary course of business. To the extent any fixtures 

or Tangible Personal property were removed from Feistritz, Piney Flats, or the Line in Boxes 

after the Acquisition Date, Paragraph C.2 of the Order requires Polypore to return, restore to 

good working order suitable for use under normal operating conditions, or replace with 

equivalent assets these fixtures or Tangible Personal Property. 

Polypore has not removed any Microporous Assets from Microporous, or removed any 

fixtures or Tangible Personal Property from Feistritz, Piney Flats, or the Line in Boxes. 

Polypore is therefore in compliance with the requirements of~ C.l and ~ C.2 of the Order. 

2. Consents and Waivers 

In accordance with~ II.C.3 of the Order, Section 5.3( d) ofthe Agreement requires Sellers 

to secure all Consents from third parties that are necessary to divest any property or assets, 

tangible or intangible (including, not limited to, any Contract), of Microporous to Seven Mile. 7 

Schedule 3.3 of the Agreement contains a list of all third parties from which consents are 

required pursuant to Section 5.3(d) of the Agreement. All required consents listed on Schedule 

3.3 will be obtained prior to the Closing Date. 

3. Shared Intellectual Property License 

Section 3 .13(h) of the Agreement contemplates the grant of a Shared Intellectual Property 

License to Seven Mile for all Polypore-owned Intellectual Property used by Microporous, in 

Provided, however, that in instances where (i) Microporous Battery Separators are sold together with 

Daramic Battery Separators under the same Terminable Contract, Sellers shall only be required to obtain 

such Consents from the Customer as necessary to divest that portion of the Terminable Contract pertaining 

to Microporous Battery Separators, or (ii) any Contracts are utilized in connection with the manufacture of 

Microporous Battery Separators and Daramic Battery Separators under the same Contract, Sellers shall 

only be required to obtain such Consents from the other contracting party as necessary to divest that portion 

of the Contract pertaining to Microporous Battery Separators; provided further, however, that if for any 

reason Sellers are unable to accomplish such an assignment or transfer of Contracts, they shall enter into 

such agreements, contracts, or licenses as are necessary to realize the same effect as such transfer or 

assignment. Order,~ II.C.3. 

8 
PUBLIC VERSION 

satisfaction of~ II.C.4 of the Order. Exhibit B of the Agreement is a Shared Intellectual Property 

License, which conveys to Seven Mile all rights to use Shared Intellectual Property, as defined 

by the Order. 

In accordance with~ II.F.l ofthe Order, Section 5.4(e) of the Agreement also prohibits 

Polypore from suing Microporous to block access to technology owned by Polypore as of the 

Closing Date, including the Jungfer Technology,8 where such lawsuit would have the potential to 

interfere with Seven Mile's ability to practice in the research, development, manufacture, use, 

import, export, distribution, offer to sell or the sale of Microporous Battery Separators. In 

accordance with ~ II.F.2 of the Order, Section 5.4(£) of the Agreement requires Polypore to 

provide, upon reasonable notice and request from Seven Mile, the assistance of knowledgeable 

Polypore employees to assist Seven Mile to defend against, respond to, or otherwise participate 

in any litigation related to the Microporous Intellectual Property, or Shared Intellectual Property. 

4. Supply Agreement 

In accordance with Section 8.2(d) of the Agreement, Microporous will supply battery 

separators to Daramic Battery Separator India Private Ltd. ("Daramic India"), Dararnic LLC's 

Indian subsidiary, for a period of-· The current sales of Microporous' Feistritz plant to 

Daramic India represent approximately .% of Feistritz volume, and the Supply Agreement 

sales price of €. is profitable for Feistritz. Microporous in not required to supply Daramic 

India beyond the minimum required by the Supply Agreement. The Supply Agreement 

guarantees that Microporous will maintain a reliable customer and a revenue source during the 

transition period. 

Paragraph I. W. of the Order defines the Jungfer Technology to be "all Intellectual Property owned or 

licensed by [Polypore] as a result of its acquisition of Separatorenerzeungung GmbH ('Jungfer') on 

November 16, 200J.P 

9 
PUBLIC VERSION 

S. Microporous Employees 

On February 25, 2013, Polypore uploaded all Microporous Employee Information 

required by~ I.P and~ II.D.l ofthe Order to a data room to which Seven Mile was given access 

on December 21, 2012. This information included (i) a list of all Micro porous Employees, (ii) 

Employee Information (as defined by the Order) for each Person on the list, and (iii) any 

available contact information, including the last known address for any Person formerly 

employed as a Microporous Employee whose employment terminated prior to the Closing Date. 

Polypore has continued to update this information as changes have occurred with respect to 

Microporous Employees in the ordinary course of business. For example, on June 27, 2013, 

Polypore provided an update to the list of Microporous Employees for new employees that began 

employment with Polypore after February 25, 2013. Additionally, on July 16, 2013 and on 

August 30, 2013, Polypore provided available contact information for those Microporous 

Employees terminated after February 25, 2013.9 

In addition, on February 13, 2013, Polypore made available to Seven Mile the 

opportunity to immediately inspect the personnel files and other documentation relating to 

Microporous Employees, including all applicable employee benefit plan descriptions, and to 

interview any Microporous Employees personally and outside the presence or hearing of any 

employee or agent of Polypore. 

Pursuant to ~II. D. of the Order, Polypore has taken all actions necessary to assist Seven 

Mile in evaluating, recruiting, and employing Microporous Employees. In particular, Polypore 

has not impeded or interfered with Seven Mile's offer of employment to any Microporous 

9 Polypore first provided Microporous Employee lnformation to Seven Mile in February 2013. Polypore 

reengaged its negotiations with Seven Mile on May 10, 2013. Since May 10, 2013, Seven Mile has had 

uninterrupted access to the Microporous Employee Information available in the data room. In addition, on 

July 30 and 31 , Seven Mile met in-person with Peter Gaugl, Roger Eggleston, Bill Brown, Steve 

McDonald, and Steve Willis pursuant to~ II.D of the Order. 

10 
PUBLIC VERSION 

Employee. Polypore has not attempted to persuade, or offered any incentive to, any 

Microporous Employees to decline employment with Seven Mile. Pursuant to Section 5.9(g) of 

the Agreement, Polypore has also removed any contractual impediments and irrevocably waived 

any legal or equitable rights it may have to deter Microporous Employees from accepting 

employment with Seven Mile. 

In addition, Polypore has continued to extend to any Microporous Employees, during 

their employment prior to the Closing, all employee benefits offered by Polypore, including 

regularly scheduled or merit raises and bonuses, and regularly scheduled vesting of all pension 

benefits. Polypore has agreed to pay a Retention Bonus to any Microporous Employees to whom 

Seven Mile has made a written offer of employment who accept a position with Seven Mile at 

the time of divestiture of Microporous. These employees, and others who will receive a 

Retention Bonus, and the corresponding amounts, are listed in Annex 9. 

6. Technical Services 

Pursuant to ,-r II.F.3, Seven Mile has requested, and Polypore has agreed to provide, 

technical services to Seven Mile, as described in a Technical Services Agreement (Annex 4). 

These services are described in Schedule A to the Technical Services Agreement. The Technical 

Services Agreement will endure for up to two years. 

7. Transition Services 

Pursuant to ,-r II.F.3.b, Seven Mile has requested, and Polypore has agreed to provide, 

transition services to Seven Mile, as described in a Transition Services Agreement (Annex 3). 

These services are described in Schedule A to the Transition Services Agreement. The 

Transition Services Agreement will endure for up to two years. 

11 
PUBLIC VERSION 

8. Customers with Terminable Contracts 

In accordance with ~ VI.A.5 of the Order, Section 5.8 of the Agreement requires Seven 

Mile to allow all Customers with Terminable Contracts for Microporous Battery Separators the 

right and option unilaterally to reopen and renegotiate or to terminate their contracts, solely at the 

Customer's option, without penalty, forfeiture or other charge to the Customer consistent with 

~ VI.A.5 of the Order as if the Terminable Contracts remained with Polypore. 10 Also in 

accordance with ~ VI.A.5 of the Order, Section 5.8 of the Agreement requires that all Customers 

with Terminable Contracts for Microporous Battery Separators be considered third party 

beneficiaries of Section 5.8 of the Agreement, with the right to enforce Section 5.8 independent 

and apart from Polypore. 

9. Confidential Business Information 

In accordance with ~ II.G of the Order, Section 5.9 of the Agreement requires Polypore 

to, as soon as practicable after the Closing Date, deliver in good faith, and at Polypore's expense, 

all Microporous Confidential Business Information to Seven Mile in a manner that ensures its 

completeness and accuracy and that fully preserves its usefulness. Also in accordance with 

~ II.G of the Order, Section 5.9 requires Polypore to afford Seven Mile access to all such 

Confidential Business Information and employees who possess such information until delivery 

has been completed, and to safeguard the Confidential Business Information from improper use, 

as described by the Order. 

10 Paragraph VI.A.5 of the Order similarly requires Polypore to allow all Customers with Terminable 

Contracts for Microporous Battery Separators the right and option unilaterally to reopen and renegotiate or 

to terminate their contracts, solely at the Customer's option, without penalty, forfeiture or other charge to 

the Customer. 

12 
IV. 

PUBLIC VERSION 

POLYPORE EXTENSIVELY MARKETED MICROPOROUS, WITH 

PROFESSIONAL ASSISTANCE OF WELLS FARGO SECURITIES, 

("WELLS FARGO"), BEFORE SELECTING SEVEN MILE AS 

DIVESTITURE BUYER 

THE 

LLC 

THE 

In order to comply with ~ II.H of the Order, Polypore engaged Wells Fargo to market 

Microporous to potential divestiture buyers. In total, Wells Fargo communicated with more than 

• potential divestiture buyers, including both financial and strategic institutions. On behalf of 

Polypore, Wells Fargo prepared a confidential offering memorandum ("CIM") and furnished the 

CIM and other confidential offering materials to • parties that expressed some interest in 

reviewing the offering materials. Wells Fargo and senior Polypore management provided an inperson management presentation to • parties with serious interest in further considering the 

transaction. - parties submitted written initial indications of interest. In response to 

Wells Fargo's invitation to submit revised indications of value, • parties submitted revised 

indications. From this group, Polypore chose Seven Mile as the buyer most capable of fulfilling 

the Order requirements and restoring competition to the marketplace. A description of Seven 

Mile's business is enclosed as Annex 12. 

With the assistance of Wells Fargo and other advisors, Polypore negotiated the 

Agreement with Seven Mile. As described in more detail below, Seven Mile is a highly 

qualified buyer from both a financial and competitive perspective, and the divestiture to Seven 

Mile will fully restore competition to the Relevant Markets in compliance with the terms of the 

Order. 

Polypore has kept the FTC staff as well as the Monitor Trustee apprised of the efforts 

undertaken to divest Microporous. As part of Polypore's monthly compliance report, and in 

satisfaction of~ X. I of the Order, Polypore has provided a detailed description of all substantive 

contacts and negotiations for the divestiture, the identity of all parties contacted, copies of all 

13 
PUBLIC VERSION 

material written communications to and from such parties, and all reports and recommendations 

concerning the divestiture. Throughout the process, the FTC staff has provided input and 

guidance regarding potential divestiture buyers, proposed management team members, key terms 

of the Agreement, and other aspects of the divestiture process. Polypore has fully cooperated 

with the staffs requests for information, and the Divestiture Agreements currently reflect all 

guidance, comments, and revisions provided by the FTC staff. 

V. SEVEN MILE IS A WELL-QUALIFIED BUYER AND IS READY, WILLING 

AND ABLE TO OPERATE MICROPOROUS AS A VIABLE, INDEPENDENT, 

AND EFFECTIVE COMPETITOR 

The FTC has identified two key factors to consider when evaluating a divestiture buyer's 

ability to restore competition to the relevant market: "(1) the financial capability and incentives 

to acquire and operate the assets, and (2) the competitive ability to maintain or restore 

competition in the market." 11 As discussed below, and as set forth in additional detail in the 

Confidential Business Plan that Seven Mile separately submitted to the FTC, Seven Mile easily 

satisfies both criteria. 

A. Seven Mile Has The Financial Capability And Incentives To Acquire And 

Operate Microporous As An Independent Competitor. 

Seven Mile is a New York-based private equity firm that seeks to acquire either control 

or substantial influence of both individual companies as well as portfolios of companies. Seven 

Mile manages or advises assets of approximately $. million while managing a portfolio 

consisting of 18 companies across the traditional industrial, business services and renewable 

energy markets. 

I I Negotiating Merger Remedies: Statement of the Bureau of Competition of the Federal Trade Commission 

19 (Jan. 30, 2012), available at http://www.ftc.gov/bclbestpractices/merger-remediesstmt.pdf. at 9. 

14 
PUBLIC VERSION 

Seven Mile has the financial ability to purchase Microporous and to continue to operate 

the business on a long-term basis. Seven Mile's financial strength is demonstrated by its fiscal 

year 2012 and first-half of 2013 revenues and assets, as well as other indicators apparent in its 

financial statements, which Seven Mile separately has provided to the staff on a confidential 

basis. Seven Mile's strong financial position will enable Seven Mile to operate, maintain, and 

develop Microporous for the foreseeable future. 

Seven Mile will fund the acquisition of Microporous through a combination of debt and 

equity. Seven Mile will obtain approximately • percent of the total funds necessary to 

consummate the transaction by way of cash equity contributions. Financing for the transaction 

and related fees and expenses will be comprised of up to $. million by way of senior unsecured 

subordinated notes, and an aggregate amount of up to $. million by way of senior secured 

credit facilities, such senior credit facilities being comprised of (i) term loan facilities of up to 

$-and (ii) a revolving credit facility of$-(a portion of the revolving credit 

facility may be used in connection with financing the transaction and related expenses). Kayne 

Anderson Mezzanine Advisors and certain of its affiliates ("Kayne Anderson") will purchase the 

senior unsecured subordinated notes. Key Bank National Association and certain of its affiliates 

("Key Bank") will underwrite the entire principal amount of senior secured credit facilities. This 

financing, as well as additional committed capital reserves, will fund the acquisition and provide 

substantial additional liquidity to Microporous to assure Microporous's financial vitality. 

Seven Mile has dedicated significant resources to structuring a financing arrangement 

that factors in the significant contribution of U.S. and Austrian operations to the cash flow of 

Microporous. Seven Mile has also performed extensive due diligence regarding Microporous's 

current investment and expenditure requirements, and is fully capable of committing the 

15 
PUBLIC VERSION 

necessary capital to meet these requirements. Accordingly, there is no question that Seven Mile 

is fully capable of purchasing Microporous and continuing to operate the business for the 

foreseeable long term. 

Seven Mile is also fully motivated to operate Microporous as an independent and 

effective competitor. Seven Mile is a private equity firm that focuses on growth and has a strong 

incentive to grow the Microporous business to achieve superior investment returns. As discussed 

in its Confidential Business Plan, Seven Mile plans to invest substantially in expanding 

Microporous's capacity, extending and enhancing customer relationships, and aggressively 

competing in each of the Relevant Markets. In short, under Seven Mile's leadership, 

Microporous has not only the financial capability but also an overriding incentive to compete 

vigorously to achieve Seven Mile's investment strategy and goals. 

B. Seven Mile Has The Competitive Ability To Restore Competition In The 

Relevant Markets. 

Seven Mile has extensive experience in acquiring and enhancing both venture and growth 

portfolio companies. As noted above, Seven Mile manages or advises on over $. million in 

assets and manages 18 distinct private equity investments that span North America and Europe. 

The members of Seven Mile's senior management team are highly-qualified, experienced 

professionals, selected for their talent, knowledge, and experience at some of the most 

prestigious firms in the financial community. 

Seven Mile's portfolio companies touch a broad spectrum of industries. Seven Mile has 

deep-seated expertise in products that Microporous sells and end-markets that it serves. With its 

global footprint, talented team, and proven record in operating numerous portfolio companies, 

Seven Mile is the ideal acquirer to ensure that competition is fully restored and advanced in the 

Relevant Markets. 

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PUBLIC VERSION 

Seven Mile's two principal partners together have over 40 years of combined investment 

and/or management experience. They make Seven Mile uniquely qualified to acquire 

Microporous and to ensure its return to vigorously competitive independence. 

Vince Fandozzi, Seven Mile's Managing Partner, has twenty years of private equity and 

investment experience, including as Global Head of Private Equity and Alternative Jnvestments 

at Citi Holdings, as Global Head ofM&A for all ofCitigroup's corporate M&A activities, and in 

Citigroup Investment Banks' M&A group advising clients in numerous industries including 

industrial, telecom & teclmology, retail & conswner products and the healthcare sectors. 

Mr. Fandozzi serves or has served on the boards of numerous companies, including in the 

plastics, automotive, power, teclmology, and finance industries. 

Kevin Kruse, a Partner at Seven Mile, has eighteen years of private equity and investment 

experience, including as a Managing Director for North American Industrials at Warburg Pincus 

LLC, and, prior to that, at AEA Investors, Inc. and Bain & Co. Mr. Kruse serves, or has served, 

on the boards of numerous companies, including in industrials, plastics, and renewable energy. 

Seven Mile has identified Jean-Luc Koch to serve as the President and CEO of 

Microporous after the Closing Date. After careful consideration, Seven Mile selected Mr. Koch 

for his extensive experience in the industry, spanning 16 years, known product expertise, and 

keen leadership ability. Seven Mile separately has provided more extensive details about 

Mr. Koch's experience and qualifications that make him an ideal leader for Microporous. 

Seven Mile's experience in partnering with existing senior management teams will also 

assure the continued successful operation of Microporous. Under the leadership of certain key 

managers, including Bill Brown, Peter Gaugl, Roger Eggleston, Steve McDonald, and Steve 

Willis, the Microporous business has flourished since the Acquisition. Indeed, Microporous's 

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PUBLIC VERSION 

Piney Flats and Feistritz plants have operated autonomously for the last few years and have been 

primarily operated by plant-level management teams. 

Microporous will retain these key leaders post-divestiture, and they will bring their 

industry, plant and product knowledge with them. Mr. Brown will serve as Microporous's Chief 

Financial Officer and will benefit from five years of experience in the industry and ten years of 

experience working with multinational operations. Mr. Brown has successfully managed 

fmances for Microporous since the Acquisition. Mr. Eggleston and Mr. Gaugl will continue as 

the Plant Managers for Piney Flats and Feistritz, respectively. They have a combined 23 years of 

experience in the industry, and have successfully managed the Piney Flats and Feistritz plants 

since well before the Acquisition. 

Mr. McDonald will continue as Microporous's Vice President of Sales. With 41 years of 

experience in the industry, strong relationships with current Microporous customers, and an indepth battery application and product knowledge, Mr. McDonald is an ideal leader for Sales at 

Microporous. Mr. Willis has 16 years of experience in the industry, and is fully capable of 

handling all human resources functions at Microporous. These key managers will work with 

Seven Mile's team to continue successful operation of the Microporous strategy and business 

and ensure a fluid transition post-divestiture. 

Finally, all elements necessary to make Microporous a viable competitor will be 

transferred to Seven Mile as part of the divestiture. Most key functions to operate Microporous 

already reside at the plant level, including IT systems, customer service, customer invoicing, 

production planning, and purchasing. Both plants also will have adequate working capital at 

Closing, in addition to access to a substantial unfunded revolving credit facility to satisfy any 

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PUBLIC VERSION 

additional liquidity needs. And all intellectual property and know-how required to operate 

Microporous is included in the transaction. 

In sum, Seven Mile's extensive management expertise, the leadership team that Seven 

Mile has assembled to run Microporous, and the Microporous assets that Seven Mile is acquiring 

will make Microporous a vibrant and durable competitor that restores and enhances competition 

in the Relevant Markets. 

VI. THE PROPOSED DIVESTITURE WILL FULLY RESTORE COMPETITION 

AND WILL AClllEVE THE REMEDIAL PURPOSES OF THE ORDER 

Pursuant to the FTC's Statement on Negotiating Merger Remedies, the proposed 

divestiture must maintain or restore competition in the Relevant Markets, and achieve the 

remedial purposes of the Order, 12 which is to "to create an independent, viable, and effective 

competitor in the [Relevant Markets] and remedy[ing] the lessening of competition resulting 

from the Acquisition" as alleged by the Commission.l3 

As explained in greater detail below, as part of the divestiture, Microporous will be 

equipped with all of the assets and other ancillary relief necessary to ensure that the company 

will be an independent, viable, and effective competitor in the Relevant Markets. Further, the 

divestiture will remedy any lessening of competition resulting from the Acquisition alleged by 

the Commission, as Microporous will be wholly restored as an effective competitor for sales in 

the Relevant Markets. 

12 

13 

Negotiating Merger Remedies: Statement of the Bureau of Competition of the Federal Trade Commission 

19 (Jan. 30, 2012), available at http://www. ftc.gov/bc/bestpractices/merger-remediesstmt.pdf. 

Order,~ II. H. 

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PUBLIC VERSION 

A. Piney Flats and Feistritz 

Acquiring both Feistritz and Piney Flats puts Seven Mile in a strong competitive position. 

In particular, having both plants will allow Microporous to efficiently source and supply 

products to a global customer base. Microporous can utilize Feistritz to serve its European 

customer base and focus capacity at Piney Flats to serve its North American customers. For 

customers that prefer a supplier with global operations, Microporous will be an attractive 

supplier. 

Feistritz's current operational status arguably puts Microporous in a better position to 

compete today than before the Acquisition. As of the Acquisition, Feistritz was still under 

construction and was not a fully operational facility. Today, Feistritz is a fully functional, 

thriving source of sales for Microporous. In addition, in 2011, Polypore invested $300,000 in a 

debottlenecking project, which has increased Feistritz capacity by fifteen percent. The Feistritz 

plant makes Microporous strategically poised to grow, and to expand supply to customers in 

Eastern Europe, Russia, and Africa. 

B. Intellectual Property 

To ensure that Seven Mile will be able to continue operations at both the Piney Flats and 

Feistritz without disruption, the Agreement confers to Seven Mile a perpetual, worldwide, 

royalty-free license to Daramic technology used at either facility (the Shared Intellectual 

Property License). As noted by the Commission, the Shared Intellectual Property License will 

allow Microporous to benefit from the improvements and alterations Polypore incorporated in 

the products by using Daramic pre-Acquisition intellectual property. In addition, the Agreement 

prohibits Polypore from suing Microporous to block access to any technology Polypore owned 

as of Closing, if such suit would hinder Microporous's ability to compete in the Relevant 

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PUBLIC VERSION 

Markets. These protections will ensure that Microporous is equipped to continue production 

post-divestiture without interruption. 

C. Technical and Transition Services Agreements 

To ensure that operations are smoothly transitioned, Polypore also has agreed to provide 

technical and transition services to Microporous for a period of up to two years following 

divestiture. Transition services will include support with respect to information technology, 

finance and accounting, treasury, payroll, human resources/employee benefits, sales/marketing, 

insurance risk management, procurement, and administrative and logistical support. Technical 

services will include separator analysis support, technical and analytical support, training, 

customer support, and manufacturing support. 

Polypore believes that the Technical Services Agreement and Transition Services 

Agreement provide the necessary support to ensure that Microporous will succeed in the 

Relevant Markets. 

D. Customers 

Since the Acquisition, Polypore has preserved and reinforced Microporous's strong 

relationship with key customers. Microporous's proposed management team has undertaken 

significant efforts to ensure that Microporous customers have been appropriately informed about 

the transition of Microporous ownership to Seven Mile and to respond to customer inquiries 

regarding the transition. In addition, Section 5.3 (c) of the Agreement requires both Polypore and 

Seven Mile to use commercially reasonable efforts to participate in joint communications and/or 

meetings with customers and suppliers regarding the sale of Microporous and the transition of 

the business from Polypore to Seven Mile. Microporous's proposed management team is fully 

confident that the transition of customer relationships will be seamless. 

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PUBLIC VERSION 

E. Increased Competition 

The divestiture of Microporous to Seven Mile will restore Microporous as a competitor in 

the deep-cycle, motive, and SLI markets. 14 Microporous's independent presence in the deepcycle and motive markets will result in increased competition. In the motive and SLI markets, 

Microporous will be able to expand capacity in both North America and Europe and can become 

a viable force against current competitors in those regions while providing increased supply. 

In addition, any likelihood of coordinated effects in the Relevant Markets will be 

significantly reduced following the divestiture of Microporous to Seven Mile. 15 First, as a result 

of the divestiture, Microporous will be restored as a third competitor in the SLI market, 

eliminating any presumption that coordinated effects are likely. Second, the Commission 

acknowledged that battery separators are differentiated products that are, oftentimes, sold 

through large negotiated contracts. 16 Accordingly, the Commission noted that these factors 

"make it more difficult for sellers to coordinate on price and increase the incentives for sellers to 

deviate from any coordinated pricing arrangements." 17 By reinstating Microporous as a third, 

viable competitor in the SLI market and eliminating a presumption of coordinated effects, any 

potential for coordinated effects will be absent. 

14 

15 

16 

17 

The Commission found that the Acquisition was reasonably likely to substantially lessen competition in the 

deep-cycle-, motive, and SLI markets. Opinion, pp.26-27. 

The Commission detennined that Polypore's acquisition of Microporous resulted in a duopoly in the SLI 

market, and noted that the duopoly created a presumption of anticompetitive coordinated effects. Opinion, 

p. 31. 

Opinion, p. 32. 

Opinion, p. 32. 

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PUBLIC VERSION 

VII. REQUEST FOR EXPEDITIOUS APPROVAL 

Polypore requests expedited approval of the proposed divestiture of Microporous to 

Seven Mile as soon as possible after the expiration of the public comment period, and m 

particular, no later than December 12, 2013. 

Approval by December 12, 2013 is necessary in order to ensure that Polypore is able to 

comply with the Order. 18 Therefore, time is of the essence in obtaining approval for the sale of 

Microporous to Seven Mile. 

In addition, prompt approval and consummation of the divestiture of Microporous to 

Seven Mile will further the purposes of the Order and is in the interests of customers. 

Expeditious approval of the transaction will remove the uncertainty facing customers and 

employees over the ownership of Microporous. FTC Staff are already familiar with Seven Mile 

as a result of Polypore's extensive engagement with the FTC throughout the divestiture process, 

including detailed descriptions of Seven Mile's involvement in the divestiture process in monthly 

compliance reports and the second annual compliance report. The Staff have also spoken 

extensively with Seven Mile's senior management team to confirm that Seven Mile is the ideal 

acquirer of Microporous. 

Polypore and Seven Mile are prepared to close the transaction as soon as Commission 

approval is obtained, and in any case, no later than three business days after Commission 

approval, as stipulated in Section 8.1 of the Agreement. For the foregoing reasons, Polypore 

respectfully requests that the Commission approve the proposed divestiture of Microporous to 

Seven Mile, as embodied in the enclosed Agreement, as soon as practicable after expiration of 

the public comment period, and in particular by December 12, 2013. 

18 Paragraph Il.A. of the Order requires Polypore to divest Microporous by December 26,2013. 

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PUBLIC VERSION 

VIII. REQUEST FOR CONFIDENTIAL TREATMENT 

This petition, including the enclosed Agreement and related documents, contains certain 

confidential and competitively-sensitive business information relating to the divestiture of 

Microporous. Disclosure of such confidential information may prejudice Polypore and Seven 

Mile, and cause harm to the ongoing competitiveness of Microporous. Pursuant to Sections 

2.4l(f)(4) and 4.9(c) of the FTC's Rules of Practice and Procedure, 19 Polypore has redacted such 

information from the public version of this petition, and requests confidential treatment for such 

information under Section 4.10(a)(2) of the FTC's Rules of Practice and Procedure20 and 

Sections 552(b)(4) and (b)(7) of the Freedom of Information Act.21 In the event that a 

determination is made that any material marked as confidential is not subject to confidential 

treatment, Polypore requests that the FTC provide immediate notice of that determination to 

Bernard A. Nigro, Jr. and Maria R. Cirincione, and an adequate opportunity to appeal such a 

decision. 

Dated: 

19 

20 

21 

September 24, 2013 

16 C.F.R. §§ 2.41(f)(4) and 4.9(c). 

16 C.F.R. § 4.10(a)(2). 

5 U.S.C. §§ 552(b)(4) and 552(b)(7). 

Respectfully submitted, 

Bernard A. Nigro, Jr. 

Maria R. Cirincione 

Fried, Frank, Harris, Shriver, & Jacobson LLP 

801 17th Street, NW 

Washington, DC 20006 

Counsel for Polypore International, Inc. 

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