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DOJ Action Removes Asset Acquisition Hurdle for Hercules Offshore

1st Win for Baker Botts’ Expanded Antitrust Team

WASHINGTON, D.C., April 8, 2011 -- The Antitrust Division of the Department of Justice has closed its investigation into Hercules Offshore’s proposed acquisition of substantially all of the assets of Seahawk Drilling and granted early termination of the Hart-Scott-Rodino Act waiting period.

The DOJ ruling last week was particularly important in this transaction because Hercules Offshore is purchasing the assets from Seahawk as a debtor-in-possession under the Bankruptcy Code. The parties were concerned that the issuance of a second request and the delay in responding to a subpoena would be fatal to the transaction. DOJ clearance also cleared the way for Bankruptcy Court approval of the sale of assets, which was received on April 5. The asset sale is tentatively scheduled to close on or about April 20.

The Hart-Scott-Rodino Act provides for truncated 15-day waiting periods (instead of 30 days) for acquisitions in bankruptcy. The Antitrust Division conducted an intensive investigation into the proposed acquisition of assets and asserted that the parties had a combined share in excess of 80 percent in the relevant market. Using a pull and refile HSR strategy, the parties were able to successfully develop and assert a “failing firm” defense for Seahawk, leading the Antitrust Division to close its investigation.

Baker Botts’ expanded antitrust team -- former Howrey lawyers who joined the firm in March -- represented Hercules Offshore in the DOJ matter. Hercules Offshore is a shallow water-drilling contractor headquartered in Houston. The antitrust group has represented Hercules Offshore in past transactions.

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