• Buyer must control Sub
• In the merger, Target shareholders exchange Target stock constituting control of Target for voting stock of Buyer
• Buyer voting stock must be used
• Can use non-stock consideration to acquire
  remaining Target shares in excess of
  what's necessary to obtain control
• After the merger Target must hold substantially all of its properties and substantially all of the properties of Sub

Two-step reverse triangular mergers

Post-merger dispositions

Subsequent upstream merger of Target into Buyer

• Target can transfer all or a part of its assets to a subsidiary controlled by Target
• Buyer can transfer its Target stock to a subsidiary controlled by Buyer
• Analysis - Per Rev. Rul. 73-427, 1973-2 C.B. 301:

• Sub is disregarded for tax purposes
• Merger is treated as a purchase
  by Buyer of Target's stock