M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Monday, July 23, 2007

Transocean and GlobalSantaFe to Combine

Transocean Inc. and GlobalSantaFe Corporation today announced a merger of equals with an enterprise value of approximately $53 billion.  Under the terms of the agreement, Transocean shareholders will receive $33.03 in cash and 0.6996 shares of the combined company for each share of Transocean they own.  GlobalSantaFe shareholders will receive $22.46 in cash and 0.4757 shares of the combined company for each share of GlobalSantaFe they own.  The transaction will be subject to approval by shareholders of both companies. 

Notably, financing for the cash consideration will come from a bridge loan by Goldman, Sachs & Co. and Lehman Brothers Inc. for $15 billion. The bridge loan will be for a term one year.  The participants decision to obtain an extended bridge loan rather than going straight to the debt markets is likely due to the current choppy state of the debt market.  As was reported ad infinitum last week, many leveraged deals are being post-poned and the market is on edge with the Chrysler financing in particular under pressure.  Though Cerberus's $4 billion deal for United Rentals also announced today may shore up confidence in the leveraged loan market.  There, Cerberus is putting up about $1.5 billion of equity, with the remainder financed through debt financed from the high-yield and asset-backed securities markets, according to the Wall Street Journal.  For those interested in buying, the United Rentals deal also has a short 30-day go-shop. 

For those who follow such things, Baker Botts L.L.P. is acting as legal counsel to Transocean, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to GlobalSantaFe.

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