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US-Russia relations: A&O, Skadden and V&E win roles as oil company EDC delists and sells $1.7bn stake

Despite the volatile economic conditions in Russia, Allen & Overy (A&O), Skadden, Arps, Slate, Meagher & Flom and Vinson & Elkins (V&E) remain active in the region after having scored roles on Eurasia Drilling Company’s (EDC) delisting and subsequent minority stake sale.

Announced in the early hours this morning (20 January), the Russian publicly-traded company agreed with members of its management team that EDC will combine with EDC Acquisition Company for a transaction structured under Cayman Islands law and valued at $3.2bn. In the process EDC will be delisted from the London Stock Exchange with its minority shareholders paid $22 per share. The company’s board of directors formed a special committee advised by V&E to negotiate the terms of the merger while Skadden represented EDC Acquisition Company.

A&O-advised Schlumberger has then agreed to acquire a minority stake in EDC for an estimated $1.7bn for a 45% of total shares at completion. Schlumberger also has the option to buy the remaining 55% of shares under a ‘call’ option within the next five years. The deal is subject to a number of conditions and is expected to close in the second half of February 2015.

The V&E team was led by London corporate partner François Feuillat alongside corporate partners Natalya Morozova in Moscow, Kimberley Wood in London and Steve Gill in Houston. The special committee is also being advised on Cayman Islands law by Maples and Calder corporate head Jack Marriott out of London.

EDC Acquisition Company advice was led by Skadden partner Danny Tricot in London along with the firm’s co-head of Moscow Alexy Kiyashko and assistance from Walkers on Cayman law aspects. A&O corporate partner Jeremy Parr and Moscow’s head of corporate Anton Konnov represented Schlumberger, alongside Appleby.

The move represents an unusually large investment by US-listed company Schlumberger in Russian headquartered EDC during a period of rising tensions between Moscow and the US, and will play a large role in the development of Russia’s oil industry after the completion. This follows the reduction in oil prices by half since last summer which is set to bring increased consolidation in the oil and gas sector.