PIONEER SPIRIT: A combination of two of the largest players in the oilfield services industry presented unusual challenges for Doug Bacon and Sean Wheeler, mergers and acquisitions partners at Kirkland & Ellis. They represented the Rowan Cos. in a $12 billion all-stock merger with a larger company, Ensco. Because both companies were organized in the United Kingdom – but traded on the New York Stock Exchange – the deal hit unexpected hurdles. But the resolution could pave the way for other cross-border mergers. "It was a really complicated process," Bacon says. "It's not like there was a simple roadmap to follow," Wheeler adds.
TRAILS BLAZED: Both Ensco and Rowan moved to the United Kingdom a few years ago for tax advantages. But because both were organized as public limited companies, or PLCs, they did not have to go through typical UK regulatory steps. Wheeler and Bacon chose to structure the deal through a "scheme of arrangement," a process never used before to combine two UK companies that traded shares in America. It required court approval, as well as "yes" votes from 75 percent of institutional and individual investors. After activist investors demanded a higher transaction price, Bacon and Wheeler were able to renegotiate more favorable terms.
FUTURE EXPLORATIONS: This deal involved companies in an industry facing tough times. But similar transactions could be in the offing for other former U.S. companies that repatriated to the UK. "We've kind of created a roadmap for people to follow," Wheeler says. How they structured the deal would be "equally applicable to any kind of company formed in the UK," Bacon says. The firm is now marketing their expertise in the area. "Public company mergers are hard enough," Wheeler says. "Cross-border public company mergers are even harder."