424B3 1 d306036d424b3.htm FORM 424(B)(3) Form 424(b)(3)
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-179749

 

 

LOGO

March 8, 2012

Dear Stockholder:

You are cordially invited to the Special Meeting of Stockholders of Rowan Companies, Inc., a Delaware corporation (“Rowan Delaware”), on April 16, 2012, at 8:00 a.m. local time, in Auditorium 1, on Level Two of Williams Tower, 2800 Post Oak Boulevard, Houston, Texas 77056. Only stockholders of record at the close of business on March 8, 2012, are entitled to notice of and to vote at the special meeting. Details of the business to be presented at the special meeting can be found in the accompanying Notice of Special Meeting of Stockholders and proxy statement/prospectus.

At the special meeting, you will be asked to adopt and approve proposals related to the corporate restructuring of Rowan Delaware and the group of companies it controls. The first proposal is the adoption of an Agreement and Plan of Merger and Reorganization (the “merger agreement”) between Rowan Delaware and one of its subsidiaries. If the merger agreement is approved, we would consummate a merger (the “merger”), the result of which is that you would hold American depositary shares (“ADS”), which will represent Class A Ordinary Shares of a newly formed public limited company named “Rowan Companies plc” (“Rowan UK”) incorporated under English law and subject to U.K. laws. Upon completion of the merger, our business and operations will continue in substantially the same manner except that Rowan UK will be the parent company of the Rowan group of companies and you will own ADS representing shares in an English company instead of stock of a Delaware corporation. The second proposal is the approval of mandatory offer provisions to be included in Rowan UK’s articles of association that provide Rowan UK shareholders with protections relating to takeovers similar to the mandatory offer provisions and certain other protections afforded to shareholders of many other U.K. public companies. The third proposal is the approval of provisions to be included in Rowan UK’s articles of association that provide for the elimination of a classified board, beginning in 2013.

We currently anticipate that the merger will become effective on or about April 18, 2012, although the merger may be postponed or abandoned by our Board of Directors at any time, including after stockholder approval.

We will submit an application to the New York Stock Exchange (the “NYSE”) and anticipate that, immediately following the effective time of the merger, the ADS will be listed on the NYSE under the symbol “RDC,” the current symbol for Rowan Delaware common stock. We have no current plans to list ADS (or Rowan UK’s shares) on any other securities exchange. We estimate that up to 150 million ADS representing Class A Ordinary Shares of Rowan UK will be delivered in connection with the merger and the transactions described in this proxy statement/prospectus.

Upon completion of the merger, we will remain subject to the U.S. Securities and Exchange Commission reporting requirements, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules of the NYSE, and we will continue to report our consolidated financial results in U.S. dollars and in accordance with U.S. generally accepted accounting principles. We also must comply with any additional reporting requirements of English law.

Generally, for U.S. federal income tax purposes (i) stockholders of Rowan Delaware who are U.S. holders should recognize gain, if any, but not loss, as a result of the merger, and (ii) stockholders of Rowan Delaware who are not U.S. holders will not be subject to U.S. federal income tax as a result of the merger.


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The merger cannot be completed unless the proposal to adopt the merger agreement is approved by the holders of a majority of Rowan Delaware’s outstanding shares entitled to vote at the special meeting. The proposals to approve the mandatory offer provisions and the provisions regarding the elimination of a classified board will not be presented at the special meeting if the proposal to adopt the merger agreement is not approved by the holders of a majority of Rowan Delaware’s outstanding shares entitled to vote at the special meeting. If the proposal to approve the mandatory offer provisions or the proposal to approve the provisions regarding the elimination of a classified board is not approved by the holders of a majority of Rowan Delaware’s outstanding shares entitled to vote at the special meeting, the provisions that did not receive stockholder approval will not be included in Rowan UK’s articles of association upon the consummation of the merger. If the proposal to adopt the merger agreement is approved and the other conditions to closing set forth in the merger agreement are satisfied or waived, we intend to complete the merger regardless of whether the mandatory offer provisions or the provisions regarding the elimination of a classified board are approved. The accompanying proxy statement/prospectus contains important information about the proposals and we encourage you to read it. In particular, you should carefully consider the discussions in the sections of the proxy statement/prospectus entitled “Forward-Looking Statements” beginning on page 22 and “Risk Factors” beginning on page 25.

Our Board of Directors has determined that the merger, the merger agreement, the mandatory offer provisions in Rowan UK’s articles of association and the provisions regarding the elimination of a classified board in Rowan UK’s articles of association are advisable and in the best interests of Rowan Delaware and our stockholders and, as such, has unanimously approved the merger, the merger agreement, the mandatory offer provisions and the provisions regarding the elimination of a classified board. The Board of Directors recommends that you vote “FOR” the proposal to adopt the merger agreement, “FOR” the proposal to approve the mandatory offer provisions proposed to be included in Rowan UK’s articles of association and “FOR” the proposal to approve the provisions regarding the elimination of a classified board proposed to be included in Rowan UK’s articles of association.

Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the special meeting, please take the time to vote by completing and mailing the enclosed proxy card or voting instruction card and either return it in the pre-addressed envelope provided or vote through the Internet or by telephone, as soon as possible. You may revoke your proxy and vote in person if you decide to attend the special meeting. We would appreciate your informing us if you expect to attend the meeting so that we can provide adequate seating.

Yours very truly,

 

LOGO

H.E. Lentz

Chairman of the Board of Directors

Neither the U.S. Securities and Exchange Commission nor the U.K.’s Financial Services Authority (the “FSA”) has approved or disapproved of the securities to be issued in the merger or determined if this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense. For the avoidance of doubt, this proxy statement/prospectus is not intended to be and is not a prospectus for purposes of the E.U. Prospectus Directive and/or the FSA’s Prospectus Rules.

This proxy statement/prospectus is dated March 8, 2012, and is first being mailed to stockholders of Rowan Delaware along with a form of proxy card or voting instruction card on or about March 14, 2012.


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LOGO

Rowan Companies, Inc.

2800 Post Oak Boulevard, Suite 5450

Houston, Texas 77056

Notice of Special Meeting of Stockholders to be held on April 16, 2012

To the Stockholders of Rowan Companies, Inc., a Delaware corporation (“Rowan Delaware” or the “Company”):

Notice is hereby given that a Special Meeting of Stockholders of the Company will be held on April 16, 2012, at 8:00 a.m. local time, in Auditorium 1, on Level Two of Williams Tower, 2800 Post Oak Boulevard, Houston, Texas 77056. The items of business are:

1. To adopt the Agreement and Plan of Merger and Reorganization (the “merger agreement”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, by and between Rowan Delaware and Rowan Mergeco, LLC, a newly formed Delaware limited liability company and wholly owned subsidiary of Rowan Delaware (“Rowan Mergeco”), pursuant to which Rowan Mergeco will merge (the “merger”) with and into Rowan Delaware, with Rowan Delaware surviving the merger as an indirect, wholly owned subsidiary of Rowan Companies Limited, a newly formed private limited company incorporated under English law. Rowan Companies Limited will be a wholly owned subsidiary of Rowan Delaware until immediately before the effective time of the merger, at which time it will re-register as a public limited company named “Rowan Companies plc” or a similar name (“Rowan UK”). Pursuant to the merger agreement, each outstanding share of common stock of Rowan Delaware will be converted on a one-for-one basis into the right to receive an American depositary share (“ADS”), which represents one Class A Ordinary Share of Rowan UK.

2. If the proposal to adopt the merger agreement is approved, to approve the mandatory offer provisions proposed to be included in Rowan UK’s articles of association (the “mandatory offer provisions”).

3. If the proposal to adopt the merger agreement is approved, to approve the provisions regarding the elimination of a classified board proposed to be included in Rowan UK’s articles of association (the “declassification provisions”).

4. To approve any adjournments or postponements of the special meeting to a later date to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the adoption of the merger agreement.

Stockholders will also consider and vote on such other business as may properly come before the special meeting. These proposals are more fully described in the proxy statement/prospectus accompanying this notice.

Stockholders of record at the close of business on March 8, 2012, are entitled to receive notice of and to vote at the special meeting or any adjournment thereof. A list of all stockholders entitled to vote at the special meeting is on file at our executive offices, 2800 Post Oak Boulevard, Suite 5450, Houston, Texas 77056, and will be made open to the examination of any stockholder, for any purpose germane to the special meeting, during ordinary business hours, for a period of 10 days prior to the special meeting.

 

LOGO

Melanie M. Trent

Senior Vice President, Chief Administrative Officer

and Corporate Secretary


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Important Notice Regarding the Availability of Proxy Materials

for the Special Meeting of Stockholders to be held on

April 16, 2012

You may vote by completing, signing, dating and returning your proxy card or voting instruction card in the envelope provided. You may also vote via the Internet at www.proxyvote.com or by telephone at (800) 690-6903 by following the instructions shown on the proxy card or voting instruction card. Any stockholder attending the special meeting may vote in person. If you have returned a proxy card or voting instruction card or otherwise voted, you may revoke prior instructions and cast your vote at the special meeting by following the procedures described in the proxy statement/prospectus accompanying this notice.

Your Vote is Important

Your vote is very important, regardless of the number of shares you own. Whether or not you are able to attend the special meeting in person, it is important that your shares be represented. Please vote as soon as possible. Voting promptly, regardless of the number of shares of stock you hold, will aid us in reducing the expense of an extended proxy solicitation. Voting your shares by returning your proxy card or voting instruction card or voting through the Internet or by telephone does not affect your right to vote in person if you attend the special meeting. For specific information regarding the voting of your shares, please refer to the section entitled “General Information About the Merger and the Special Meeting — Questions and Answers Relating to the Special Meeting,” beginning on page 9 of the accompanying proxy statement/prospectus.

If you hold shares of common stock of Rowan Delaware with a broker or bank, you may also be eligible to vote via the Internet or by telephone. If you hold shares of common stock of Rowan Delaware indirectly in the Rowan Companies, Inc. savings plan, you have the right to direct the trustee of the plan how to vote as described on the separate instruction card sent to you by Fidelity.

FOR SPECIFIC INSTRUCTIONS ON VOTING, PLEASE REFER TO THE PROXY CARD OR VOTING INSTRUCTION CARD INCLUDED WITH THE PROXY MATERIALS.


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GENERAL INFORMATION ABOUT THE MERGER AND THE SPECIAL MEETING

     1   

Questions and Answers Relating to the Merger, Mandatory Offer Provisions and Declassification Provisions

     1   

Questions and Answers Relating to the Special Meeting

     9   

SUMMARY

     14   

THE MERGER

     14   

Parties to the Merger

     14   

The Merger

     14   

Reasons for the Merger

     15   

Conditions to Completion of the Merger

     16   

Regulatory Approvals

     17   

Rights of Dissenting Stockholders

     17   

Accounting Treatment of the Merger

     17   

TAX CONSIDERATIONS

     17   

Taxation of Rowan Delaware and Rowan UK

     17   

Taxation of Stockholders

     17   

U.S. Tax Considerations

     17   

U.K. Tax Considerations

     18   

Other Tax Considerations

     18   

OTHER INFORMATION

     19   

Ownership in Rowan UK; Conversion of Shares

     19   

Rights of Stockholders/Shareholders

     19   

Stock Exchange Listings

     19   

Market Price Information

     19   

Recommendation of the Board

     19   

Special Meeting of Stockholders

     20   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

     21   

SUMMARY PRO FORMA FINANCIAL INFORMATION

     22   

FORWARD-LOOKING STATEMENTS

     22   

RISK FACTORS

     25   

PROPOSAL 1 — APPROVAL OF THE ADOPTION OF THE MERGER AGREEMENT

     34   

Introduction

     34   

The Parties to the Merger

     34   

Background and Reasons for the Merger

     35   

The Merger

     39   

Ownership in Rowan UK; Conversion of Shares

     40   

Dividends and Distributions; Withholding

     40   

Possible Postponement or Abandonment

     41   

Credit Agreements

     41   

Additional Agreements

     41   

Conditions to Completion of the Merger

     41   

Stock Compensation and Benefit Plans and Programs

     42   

Effective Time of the Merger

     43   

Management of Rowan UK

     44   

Regulatory Approvals

     44   

Rights of Dissenting Stockholders

     44   

Comparison of Rights of Holders of Shares of Common Stock of Rowan Delaware with Holders of ADS representing Rowan UK Shares

     44   

 

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Stock Exchange Listing

     44   

Dividends and Share Repurchases

     44   

Accounting Treatment of the Merger

     45   

Effect of the Merger on Potential Future Status as a Foreign Private Issuer

     45   

Recommendation and Required Vote

     45   

PROPOSAL 2 — APPROVAL OF MANDATORY OFFER PROVISIONS IN ROWAN UK’S ARTICLES OF ASSOCIATION

     47   

Non-Applicability of the U.K. Takeover Code

     47   

Providing Shareholders with Certain Protections Similar to Those of the U.K. Takeover Code

     47   

Recommendation and Required Vote

     49   

PROPOSAL 3 — APPROVAL OF DECLASSIFICATION PROVISIONS IN ROWAN UK’S ARTICLES OF ASSOCIATION

     50   

Recommendation and Required Vote

     51   

MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER

     52   

U.S. Federal Income Tax Considerations

     52   

Scope of Discussion

     52   

The U.S. Anti-Inversion Rules

     53   

Material Tax Consequences of the Merger to Rowan Delaware and Rowan UK

     58   

Material Tax Consequences to Stockholders

     58   

U.K. Tax Considerations

     63   

Material Tax Consequences to Shareholders

     63   

Material U.K. Tax Considerations Relating to and After the Merger

     67   

DESCRIPTION OF CLASS A ORDINARY SHARES OF ROWAN UK

     70   

General

     70   

Share Capital

     70   

Dividends

     71   

Voting Rights

     71   

Return of Capital

     72   

Preemptive Rights and New Issues of Shares

     73   

Disclosure of Interests in Shares

     73   

Alteration of Share Capital/Repurchase of Shares

     74   

Transfer of Shares

     74   

General Meetings and Notices

     75   

Mandatory Offers

     75   

Squeeze-out & Sell-out Provisions

     76   

Liability of Rowan UK and its Directors and Officers

     77   

Anti-takeover Provisions

     77   

DESCRIPTION OF AMERICAN DEPOSITARY SHARES OF ROWAN UK

     80   

Dividends and Distributions

     81   

Distributions of Rights

     81   

Elective Distributions

     82   

Other Distributions

     82   

Redemption

     83   

Changes Affecting Class A Ordinary Shares

     83   

Issuance of ADS upon Deposit of Class A Ordinary Shares

     83   

Transfer, Combination and Split Up of ADRs

     84   

Withdrawal of Class A Ordinary Shares Upon Cancellation of ADS

     84   

Voting Rights

     85   

Fees and Charges

     85   

 

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Amendments and Termination

     86   

Books of Depositary

     86   

Limitations on Obligations and Liabilities

     87   

Pre-Release Transactions

     87   

Taxes

     88   

Foreign Currency Conversion

     88   

COMPARISON OF RIGHTS OF STOCKHOLDERS/SHAREHOLDERS

     89   

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     117   

SECURITY OWNERSHIP OF MANAGEMENT

     119   

LEGAL MATTERS

     120   

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     120   

WHERE YOU CAN FIND MORE INFORMATION

     120   

OTHER INFORMATION

     121   

Stockholder Proposals for Next Annual Meeting (if the adoption of merger agreement is not approved)

     121   

Information Concerning Stockholder Proposals Made at the Special Meeting

     121   

Shareholder Proposals After the Merger

     122   

Communications to the Board

     122   

Householding of Proxy Materials

     122   

ANNEX A AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     A-1   

ANNEX B FORM OF PRELIMINARY ARTICLES OF ASSOCIATION OF ROWAN COMPANIES PLC

     B-i   

 

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In this proxy statement/prospectus, we refer to Rowan Companies, Inc., the Delaware corporation whose shares you currently own (together with its subsidiaries where applicable), as “Rowan Delaware” or the “Company.” Additionally, we sometimes refer to Rowan Delaware (together with its subsidiaries where applicable) as “we,” “us” or “our.” “You” refers to the stockholders of Rowan Delaware. We refer to Rowan Companies Limited, a newly formed private limited company incorporated under the laws of the United Kingdom of England and Wales (“English law”) (which, prior to the effective time of the merger, will re-register as a public limited company and be renamed “Rowan Companies plc” or a similar name) as “Rowan UK.” A reference in this proxy statement/prospectus to “ADS” means a number of American depositary shares, which, immediately after the merger, will be evidenced by one or more American depositary receipts, or “ADRs.” Each ADS represents one Class A Ordinary Share of Rowan UK, par value US$0.125 per share, which we refer to as a “Class A Ordinary Share.” The number of ADS to be issued to the stockholders of Rowan Delaware is equal to the number of shares of common stock of Rowan Delaware held by the stockholders of Rowan Delaware immediately prior to the effective time of the merger described in this proxy statement/prospectus. In addition, unless the context indicates otherwise, when we refer to shares of common stock of Rowan Delaware outstanding, we are excluding the treasury shares of common stock of Rowan Delaware owned by or for the benefit of Rowan Delaware or its subsidiaries (other than any shares held for the benefit of any employee or director benefit plan). Unless otherwise noted, all monetary amounts are stated in U.S. dollars.

This proxy statement/prospectus incorporates important business and financial information about Rowan Delaware from documents Rowan Delaware has filed with the U.S. Securities and Exchange Commission, or the “SEC,” that are not included in or delivered with this proxy statement/prospectus. See “Where You Can Find More Information.”

You can obtain the documents incorporated by reference into this proxy statement/prospectus by accessing the SEC website maintained at www.sec.gov. Rowan Delaware will also provide you with copies of the documents incorporated by reference into this proxy statement/prospectus, without charge. Those documents are available to any stockholder, including any beneficial owner, upon request directed to Rowan Companies, Inc. at 2800 Post Oak Boulevard, Suite 5450, Houston, Texas 77056; Attn: Corporate Secretary. To ensure timely delivery of such documents, any request should be made no later than five business days prior to the date of the special meeting. The exhibits to those documents will generally not be made available unless they are specifically incorporated by reference into this proxy statement/prospectus or are otherwise requested by you.

You should rely only on the information contained in, and incorporated by reference into, this proxy statement/prospectus. We have not authorized anyone to provide you any different or additional information. Neither Rowan Delaware nor Rowan UK is making an offer of the securities in any country, state, province or territory where the offer is not permitted. For the avoidance of doubt, this proxy statement/prospectus is not intended to be and is not a prospectus for purposes of the E.U. Prospectus Directive and/or the U.K. Financial Services Authority’s Prospectus Rules. You should not assume that the information in this proxy statement/prospectus is accurate as of any date other than the date on the front cover of this proxy statement/prospectus or, in the case of documents incorporated by reference, the date of the referenced document, and neither the mailing of this proxy statement/prospectus to you nor the issuance of ADS in connection with the merger shall create any implication to the contrary.

 

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PROXY STATEMENT FOR THE SPECIAL MEETING OF

STOCKHOLDERS OF ROWAN COMPANIES, INC.

TO BE HELD ON APRIL 16, 2012

This proxy statement/prospectus and a proxy card or voting instruction card are first being sent or distributed to stockholders of Rowan on or about March 14, 2012. Our Board of Directors, or the “Board,” is soliciting your proxy to vote your shares at the Special Meeting of Stockholders of the Company to be held on April 16, 2012, at 8:00 a.m. local time, in Auditorium 1, on Level Two of Williams Tower, 2800 Post Oak Boulevard, Houston, Texas 77056, or the “special meeting,” and any adjourned or postponed sessions of the special meeting. Our Board is soliciting your proxy to give all stockholders of record the opportunity to vote on matters that will be presented at the special meeting. This proxy statement/prospectus provides information on these matters to assist you in voting your shares.

GENERAL INFORMATION ABOUT THE MERGER AND THE SPECIAL MEETING

The following questions and answers are intended to address briefly some commonly asked questions regarding the proposed merger and the special meeting. These questions and answers may not address all questions that may be important to you. Please refer to the more detailed information contained elsewhere in this proxy statement/prospectus, its annexes and exhibits and the documents referred to or incorporated by reference in this proxy statement/prospectus. For instructions on obtaining the documents incorporated by reference, see “Where You Can Find More Information.”

Why am I receiving this proxy statement/prospectus?

Our Board has approved a restructuring of our corporate entities, which would include changing the jurisdiction of incorporation of our parent company from Delaware to England. If approved by our stockholders, we intend to change the jurisdiction of incorporation of our parent company through a merger that will result in Rowan UK becoming the parent company of the Rowan group of companies and will result in your owning ADS representing shares in an English company instead of stock of a Delaware corporation. The merger agreement requires stockholder approval, which is why we have called a special meeting of stockholders and sent you this proxy statement/prospectus.

Questions and Answers Relating to the Merger, Mandatory Offer Provisions and Declassification Provisions

Who are the parties to the merger?

The parties to the merger described in this proxy statement/prospectus are related Rowan entities — Rowan Delaware and its subsidiary Rowan Mergeco, LLC, or “Rowan Mergeco,” a newly formed Delaware limited liability company. Prior to the merger, Rowan Mergeco will become an indirect, wholly owned subsidiary of Rowan UK. Rowan UK is a newly formed English private limited company and subsidiary of Rowan Delaware. Prior to the merger, Rowan UK will re-register as an English public limited company. As a result of the merger, Rowan UK will become the parent company of the Rowan group of companies.

What is the merger?

Under the Agreement and Plan of Merger and Reorganization (which we refer to as the “merger agreement”), Rowan Mergeco, which will hold ADS of Rowan UK, will merge with and into Rowan Delaware (which we refer to as the “merger”), with Rowan Delaware surviving the merger as an indirect, wholly owned subsidiary of Rowan UK. As a result of the merger, each of our stockholders will have the right to receive a number of ADS equal to the number of shares of common stock of Rowan Delaware that the stockholder held

 

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immediately prior to the merger. Upon completion of the merger, our business and operations will continue in substantially the same manner except that Rowan UK will be the parent company of the Rowan group of companies and you will own ADS representing shares in an English company instead of stock of a Delaware corporation.

What are the major actions that have been performed or will be performed to effect the merger?

Among others, Rowan Delaware has taken or will take the actions listed below to effect the merger. Charts summarizing the ownership structure among Rowan Delaware, Rowan UK and Rowan Mergeco before and after the effective time of the merger are also set forth below.

Major Actions

 

   

Rowan Delaware formed Rowan UK as its wholly owned subsidiary and Rowan UK issued Class A Ordinary Shares to Rowan Delaware.

 

   

Rowan Delaware deposited the Class A Ordinary Shares of Rowan UK with National City Nominees Limited as nominee or agent of Citibank, N.A., or “Citibank,” and as the registered holder of Rowan UK’s Class A Ordinary Shares. Rowan UK and Citibank entered into a deposit agreement providing for the issuance of ADS representing all issued Class A Ordinary Shares.

 

   

An intermediate holding company subsidiary was formed, as well as Rowan Mergeco; and ADS of Rowan UK were contributed to Rowan Mergeco.

 

   

Conditional upon stockholder approval of the merger agreement and satisfaction of other conditions set forth in the merger agreement, such as receipt of lender consents or waivers under, or amendments to, Rowan Delaware’s credit arrangements, as applicable, (i) Rowan Delaware will cause the restructuring to occur, which includes a series of transactions with respect to the intermediate holding company, and (ii) Rowan Mergeco, which holds ADS of Rowan UK, and Rowan Delaware will merge (with Rowan Delaware surviving the merger), and the ADS to be delivered to the Rowan Delaware stockholders will be delivered to the exchange agent for exchange, and the remaining ADS will be delivered to Rowan Delaware as a result of the merger.

 

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Structure Chart Prior to and after the Restructuring

The following diagram summarizes our organizational structure immediately before and after the restructuring. The diagram does not depict any legal entities owned by Rowan Delaware other than those related to the restructuring nor any aspects of the restructuring that may take place after the effective time of the merger.

 

LOGO

What will I receive in the merger?

The merger agreement provides that each share of common stock of Rowan Delaware outstanding immediately prior to the effective time of the merger will be converted on a one-for-one basis into the right to receive one ADS. Each ADS will represent one Class A Ordinary Share.

The depositary or its nominee will be the holder of the Class A Ordinary Shares of Rowan UK represented by the ADS. As a holder of ADS representing Class A Ordinary Shares, you will have the rights set forth in the deposit agreement among Rowan UK, the depositary and you (by virtue of your acceptance of ADS), which we refer to as the “deposit agreement.” Although you will not be a registered shareholder of Rowan UK and will not directly have shareholder rights in Rowan UK, through your ownership of ADS you generally will be entitled to equivalent rights as a shareholder of Rowan UK, although the exercise of certain rights may require you to surrender your ADS and withdraw the underlying Class A Ordinary Shares from the depositary. These arrangements are substantially comparable to market standard arrangements for listing and trading shares of U.K. companies on the New York Stock Exchange (“NYSE”) and other stock exchanges in the U.S.

Will the merger dilute my economic interest?

No. Immediately after the effective time of the merger, your relative economic ownership in Rowan UK will remain the same as your relative economic ownership of Rowan Delaware immediately before the merger.

What will be Rowan’s corporate presence in the U.K.?

We conduct a significant part of our business operations in offshore areas outside of the U.S., such as the U.K., Norway, the Middle East, Trinidad and Southeast Asia. At February 23, 2012, 21 of our 31 offshore

 

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drilling units (i.e., 68 percent) were located outside of the U.S. and its territorial waters. We expect the number of drilling units located outside of the U.S. to increase to 23 units (i.e., 74 percent) by the end of 2012. By contrast, in early 2005, approximately 8 percent of our offshore drilling units were located outside of the U.S. Our current backlog of drilling commitments exceeds US$3 billion, 96 percent of which is related to work outside of the U.S.

We currently have material business activities in the U.K., including significant assets and operational management, which we have been expanding and building upon over the past several years. We own office and warehouse space and a supply yard in Aberdeen, Scotland. We also lease residences for our expatriates in Aberdeen. At December 31, 2011, 28 percent of the total net book value of our plant, property and equipment was located in the U.K.

We currently have a General Manager, an Operations Manager, an Assistant Operations Manager and a Vice President of Sales and Marketing based in the U.K. who oversee operations relating to six rigs currently working in the North Sea, and will manage future operations in Africa. Since the U.K. is responsible for our largest overseas operating region (measured in terms of aggregate daily revenues at December 31, 2011), a significant amount of management occurs in our U.K. office.

We have implemented matrix management; thus, the regional heads of Human Resources, Finance, Maintenance, Engineering and Health, Safety and the Environment located in Aberdeen report through both the U.K. Operations Manager and our U.S. corporate offices. The General Manager in Aberdeen and his direct reports manage a group of about 750 employees who spend more than 50 percent of their time in the U.K. offices or on rigs located in the North Sea.

Following the merger, we intend to hold all of our quarterly board meetings and our annual general meeting of shareholders in the U.K. We plan to coordinate four to six senior management meetings to occur in the U.K. each year as well as an annual meeting of our senior operations managers.

Why does Rowan want to engage in the merger?

The merger would result in a change of our place of incorporation from Delaware to England. We refer to the merger and the related restructuring of Rowan’s corporate entities as the “restructuring.” We anticipate that the restructuring will result in, among other anticipated benefits:

 

   

enhancing stockholder value by our becoming more competitive in our industry for the long term;

 

   

increasing our long-term flexibility in terms of the markets in which we operate and furthering our global business efforts to evolve into a more geographically diversified company as seen by our recent business activity:

 

   

we expect 81 percent of our revenues in 2012 to be generated outside the U.S., compared to 2004 when only 10 percent of our revenues were generated outside the U.S.,

 

   

96 percent of our current contract backlog is from markets outside the U.S., and

 

   

eight of our top ten customers in 2012, by revenues, are headquartered outside the U.S.;

 

   

increasing our focus on our U.K.-managed operations, which represent our largest source of revenues this year:

 

   

38 percent of our worldwide revenues in 2012 will be managed by the U.K. operations group,

 

   

59 percent of our contract backlog is related to contracts that will be managed by our U.K. group,

 

   

approximately 750 of our employees work in the North Sea region, and

 

   

six of our seven largest and highest day rate jack-ups are in the North Sea;

 

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facilitating our global operations management and communications by substantially increasing the amount of time our Board and management team spends in the U.K., which is a significant operational area for us and is centrally located between our second and third largest regions, the Middle East and the Gulf of Mexico;

 

   

putting us on the same footing with our major competitors, most of which are domiciled overseas;

 

   

availing ourselves of a more favorable structure from which to acquire or partner with other companies in our industry;

 

   

enhancing our access to potential U.K. and European institutional investors and facilitating increases to that investor base; and

 

   

locating us in a country with a stable and well-developed legal system that we believe encourages high standards of corporate governance and provides shareholders with substantial rights.

Please see “Proposal 1 — Approval of the Adoption of the Merger Agreement — Background and Reasons for the Merger.”

When do you expect to complete the merger?

If the proposal to adopt the merger agreement is approved by our stockholders at the special meeting, and subject to satisfaction or, if applicable, waiver of all other conditions in the merger agreement, we anticipate that the merger will become effective as soon as practicable following stockholder approval. We currently anticipate that the merger will become effective on or about April 18, 2012, although the merger may be postponed or abandoned by our Board at any time, including after stockholder approval. Please see “Forward-Looking Statements” and “Risk Factors.”

Is the merger taxable to me?

For U.S. federal income tax purposes, the conversion of each outstanding share of common stock of Rowan Delaware into the right to receive one ADS upon the consummation of the merger generally will be treated as an exchange of such share for one ADS. Therefore, the U.S. federal income tax discussion contained herein refers to an “exchange” rather than a “conversion” in describing the U.S. federal income tax consequences of the merger.

Generally, for U.S. federal income tax purposes, a “U.S. holder,” which is defined below in “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders,” should recognize gain, if any, but not loss, on the receipt of ADS in exchange for Rowan Delaware common stock in connection with the merger. A U.S. holder should generally recognize gain equal to the excess, if any, of the fair market value of the ADS received in the merger over the U.S. holder’s adjusted tax basis in its shares of common stock of Rowan Delaware exchanged therefor. In determining the amount of gain recognized, each of the shares of common stock of Rowan Delaware transferred should be treated as the subject of a separate exchange. Thus, if a U.S. holder transfers some shares of common stock of Rowan Delaware on which gains are realized and other shares of common stock of Rowan Delaware on which losses are realized, the U.S. holder may not net the losses against the gains to determine the amount of gain recognized. Generally, this gain should be a capital gain. U.S. holders should not be permitted to recognize any loss realized on the exchange of their shares of common stock of Rowan Delaware in the merger. In the case of a loss, the adjusted tax basis in each ADS received by a U.S. holder should equal the adjusted tax basis of each share of Rowan Delaware common stock exchanged therefor. Thus, subject to any subsequent changes in the fair market value of the ADS, any loss should be preserved. A non-U.S. holder generally will not be subject to U.S. federal income tax on gain realized, if any, on the exchange of shares of common stock of Rowan Delaware for ADS. Please see “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders.”

For U.K. tax purposes, stockholders of Rowan Delaware who are residents of the U.S., and not residents of the U.K., will generally not be subject to U.K. taxation as a result of the merger. Generally, U.K. resident

 

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stockholders of Rowan Delaware may realize a chargeable gain or an allowable loss for U.K. corporation tax or capital gains tax purposes (as the case may be) as a result of the merger, which will be treated as giving rise to a disposal of their shares of common stock of Rowan Delaware. Generally, non-U.K. resident stockholders of Rowan Delaware should not be subject to either U.K. corporation tax or capital gains tax as a result of the merger, unless they carry on a trade in the U.K. through a permanent establishment in the U.K. or through a branch or agency in the U.K. for the purposes of U.K. corporation tax or capital gains tax, respectively, and the stock is attributable to that permanent establishment, branch or agency. In general, stockholders of Rowan Delaware who are either residents of the U.K. or non-U.K. residents whose stock is attributable to a permanent establishment, branch or agency in the U.K. through which they carry on a trade in the U.K., will be treated as acquiring the ADS exchanged in the merger for consideration equal to the market value at the effective time of the merger of the shares of common stock of Rowan Delaware converted in the merger. Please see “Material Tax Considerations Relating to the Merger — U.K. Tax Considerations — Material Tax Consequences to Shareholders.”

For stockholders of Rowan Delaware who are citizens or residents of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax treatment of the merger will depend on the applicable tax laws in such country.

WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR PRIOR TO THE SPECIAL MEETING REGARDING THE PARTICULAR TAX CONSIDERATIONS OF THE MERGER FOR YOU.

Will Rowan Delaware or Rowan UK be taxed as a result of the merger?

We believe that Rowan Delaware and Rowan UK will not incur any significant taxes as a result of the merger. Although changes in tax laws, treaties or regulations or the interpretation or enforcement of these tax laws, treaties or regulations could adversely affect the intended tax benefits of the merger to Rowan UK and its subsidiaries or the tax treatment of the post-merger corporate structure of Rowan UK, we do not believe that any of such changes would result in a material increase in taxes as compared to our current, pre-merger tax position.

Has the IRS or HMRC rendered a ruling on any aspects of the merger?

No ruling has been requested from the U.S. Internal Revenue Service, or “IRS,” in connection with the merger. The IRS will not issue a ruling that a merger is a nontaxable transaction, unless there is a separate significant issue related to the merger. Furthermore, the IRS will not rule on whether the U.S. anti-inversion rules will apply to the merger. See “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — The U.S. Anti-Inversion Rules.”

The Company has not requested or received any ruling from H.M. Revenue & Customs, or “HMRC,” with respect to the U.K. tax consequences of the merger to the stockholders of Rowan Delaware, but may seek a ruling or other guidance from HMRC regarding a specific U.K. corporation tax consequence of the merger to Rowan UK or other matters if deemed appropriate by management.

What types of information and reports will Rowan UK make available following the merger?

After the effective time of the merger, we will continue to prepare financial statements in accordance with U.S. Generally Accepted Accounting Principles, or “U.S. GAAP,” and report in U.S. dollars, and will continue to file reports under the U.S. Securities Exchange Act of 1934, as amended, or the “Exchange Act,” including reports on Forms 10-K, 10-Q and 8-K with the SEC, as we currently do. We also must comply with any additional reporting requirements of English law.

For so long as Rowan UK has a class of securities (which include the ADS) listed on the NYSE and is not considered a “foreign private issuer” under SEC rules, Rowan UK will be subject to rules regarding proxy solicitations and tender offers, and will in any event be subject to the corporate governance requirements of the NYSE, the Exchange Act and the U.S. Sarbanes-Oxley Act of 2002. These include, for example, independence

 

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requirements for Board committee composition, annual certification requirements and auditor independence rules. Rowan UK will be required to disclose any significant ways in which its corporate governance practices differ from those followed by U.S. domestic companies under the NYSE’s listing standards. To the extent possible under English law and the ADS arrangement contemplated by the deposit agreement, Rowan UK’s corporate governance practices are expected to be comparable to those of Rowan Delaware. Please see “Proposal 1 — Approval of the Adoption of the Merger Agreement — Stock Exchange Listing,” “Comparison of Rights of Stockholders/Shareholders,” and “Effect of the Merger on Potential Future Status as a Foreign Private Issuer.”

What must I do to receive the ADS that I become entitled to as a result of the merger?

If you hold Rowan Delaware stock certificates in paper format, shortly after completion of the merger, you will be sent a letter of transmittal, which is to be used to surrender your Rowan Delaware stock certificates and to request that ADS be issued to you. The letter of transmittal will contain instructions explaining the procedure for surrendering Rowan Delaware stock certificates and requesting ADS. You will not receive the letter of transmittal until shortly after the meeting. YOU SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.

Beneficial holders of shares held in “street name” through a bank, broker or other financial institution or in the Rowan Companies, Inc. savings plan will not be required to take any action if the merger is approved and consummated. Your ownership of ADS representing Class A Ordinary Shares will be recorded in book-entry form by your broker or the trustee, as applicable. If you are currently a beneficial holder, there will be no need for any additional action on your part.

It is expected that, prior to the effective time of the merger, Citibank will be appointed as the exchange agent for the merger. Rowan UK’s current share registrar is Computershare Investor Services PLC, P.O. Box 82, The Pavilions, Bridgwater Road, Bristol BS13 8AE, United Kingdom, which will continue to serve as the share registrar for its Class A Ordinary Shares after the effective time of the merger, while Citibank will continue to serve as depositary for the ADS. Citibank’s depositary offices are located at 388 Greenwich Street, New York, New York, 10013.

If I hold Rowan Delaware stock certificates, what will be my rights in relation to Rowan UK after the merger but before I exchange my certificates for ADRs?

After the effective time of the merger stockholders who hold Rowan Delaware stock certificates will generally be entitled to the same rights with respect to Rowan UK through their ownership of ADS, including the right to receive dividends declared by Rowan UK after the effective time of the merger and the right to exercise voting and other shareholder rights, but you must surrender your Rowan Delaware stock certificates. In addition, you may be required to surrender your ADS and withdraw the underlying Class A Ordinary Shares to exercise certain rights. In other words, until Rowan Delaware stock certificates are surrendered for exchange or transfers of book-entry shares are recorded by your broker, as applicable, any dividends or other distributions declared by Rowan UK after the effective time of the merger with respect to ADS issued to former Rowan Delaware stockholders, other than any ADS held by Rowan Delaware or any other subsidiary of Rowan UK, will accrue but will not be paid, and holders of such shares will not have voting rights with respect to Rowan UK. See “Proposal 1 — Approval of the Adoption of the Merger Agreement — Ownership in Rowan UK; Conversion of Shares,” and “Proposal 1 — Approval of the Adoption of the Merger Agreement — Dividends and Distributions; Withholdings.” Citibank will serve as exchange agent for the exchange of Rowan Delaware certificates for Rowan UK ADRs.

What happens to Rowan Delaware stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based awards at the effective time of the merger?

As of the effective time of the merger, all outstanding equity awards relating to shares of common stock of Rowan Delaware granted to employees and directors by the Company under our equity incentive plans prior to

 

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the effective time of the merger will entitle the holder to purchase, acquire or receive, or receive benefits or amounts based on, as applicable, an equal number of ADS. All of such equity awards will generally be subject to the same terms and conditions as were applicable to such awards granted or issued by Rowan Delaware immediately prior to the effective time of the merger, including the same exercise price, vesting schedule and terms. As of the effective time of the merger, all existing Rowan Delaware equity incentive plans will be amended to the extent necessary to reflect that ADS, rights to ADS or benefits or amounts based on ADS will be used to satisfy outstanding awards under each equity incentive plan instead of shares of common stock of Rowan Delaware.

Immediately prior to the effective time of the merger, we expect that Rowan Delaware’s 2009 Incentive Plan, or “2009 Incentive Plan” (and such other plans as we determine, if any), as may be amended, will be adopted and assumed by Rowan UK and ADS, rights to ADS or benefits or amounts based on ADS will thereafter be granted under such plan instead of shares of common stock of Rowan Delaware (or rights to such shares or benefits or amounts based on such shares) currently being granted under the 2009 Incentive Plan (and other plans, if applicable). Future awards under the 2009 Incentive Plan (and other plans, if applicable) would be subject to and governed by the terms of such plan, as assumed by Rowan UK, and any agreements entered into pursuant thereto. Please see “Proposal 1 — Approval of the Adoption of the Merger Agreement — Stock Compensation and Benefit Plans and Programs” for more information, including a description of the tax withholding and regulatory consequences of the merger.

Can I trade my shares of common stock of Rowan Delaware before the merger is completed?

Yes. Shares of common stock of Rowan Delaware will continue trading on the NYSE through the last trading day prior to the date of completion of the merger, currently anticipated to be April 17, 2012.

After the merger, where can I trade my ADS?

We will submit an application to the NYSE and anticipate that, immediately following the effective time of the merger, the ADS will be listed on the NYSE under the symbol “RDC,” the same symbol under which your Rowan Delaware common stock is currently listed. We currently do not plan to list the ADS or Rowan UK’s shares on any other securities exchange.

What are the mandatory offer provisions?

Although Rowan UK will not be subject to the U.K. Takeover Code, provisions similar to the mandatory offer provisions and certain other aspects of the U.K. Takeover Code will be included in Rowan UK’s articles of association (the “New Articles”) if Proposal 2 is approved by our stockholders. As a result, among other matters, except with the consent of the Rowan UK board of directors (the “Rowan UK Board”) or the prior approval of the shareholders, a Rowan UK shareholder, together with persons acting in concert, would be at risk of certain Rowan UK Board sanctions if they acquired more than a 30 percent shareholding in Rowan UK without making an offer to all other shareholders of Rowan UK that is in cash or accompanied by a cash alternative. See “Proposal 2 — Approval of Mandatory Offer Provisions in Rowan UK’s Articles of Association” and “Description of Class A Ordinary Shares of Rowan UK — Mandatory Offers.”

What are the declassification provisions?

The declassification provisions provide for the phased-in elimination of staggered Board terms, beginning in 2013. If Proposal 3 is approved by our stockholders, the directors elected at the 2013 annual general meeting of Rowan UK (and each annual general meeting thereafter) will be elected for one-year terms, and beginning with the 2015 annual general meeting of Rowan UK, the entire Rowan UK Board will be elected annually. See “Proposal 3 — Approval of Declassification Provisions in Rowan UK’s Articles of Association.”

 

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What is the Board’s voting recommendation?

Our Board recommends that you vote as follows:

Proposal 1 — FOR adoption of the merger agreement;

Proposal 2 — FOR approval of the mandatory offer provisions;

Proposal 3 — FOR approval of the declassification provisions; and

Proposal 4 — FOR approval of any adjournments or postponements of the special meeting to a later date to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the adoption of the merger agreement.

What is the voting requirement to approve the proposals?

The majority of the outstanding shares of common stock of Rowan Delaware entitled to vote at the special meeting must be voted “FOR” the adoption of the merger agreement in order for the merger to proceed. The same majority must vote “FOR” the approval of the mandatory offer provisions and “FOR” the approval of the declassification provisions in order for either of those two provisions to be included in the New Articles. Proposal 4 will be approved upon establishment of a quorum if the votes cast in favor of such proposal exceed the votes cast opposing such proposal. The adoption of the merger agreement in Proposal 1 is not conditional upon the approval of either Proposal 2 or Proposal 3, respectively.

Questions and Answers Relating to the Special Meeting

Who may vote at the special meeting?

You have received these proxy materials because you held shares of common stock of Rowan Delaware on March 8, 2012, the record date established for the special meeting, or the “record date,” and, therefore, you are qualified to receive notice of and to vote at the special meeting.

As of the record date, there were approximately 123,562,295 shares of common stock of Rowan Delaware outstanding and entitled to vote at the special meeting. As of January 31, 2012, our directors and executive officers beneficially owned, in the aggregate, approximately 1.44 percent of the outstanding shares of common stock of Rowan Delaware, and these shares are included in the number of shares entitled to vote at the special meeting.

What is being delivered with the proxy statement/prospectus?

These proxy materials include:

 

   

the notice of special meeting and proxy statement/prospectus for the special meeting; and

 

   

the accompanying proxy card (or voting instruction card from your broker or other intermediary) to register your vote on the proposal to adopt the merger agreement, the proposal to approve the mandatory offer provisions, the proposal to approve the declassification provisions and the other proposal described herein.

Why am I receiving paper copies of these proxy materials when previously I received only a “Notice of Internet Availability of Proxy Materials” for the Company’s annual stockholders’ meeting?

Under SEC rules, we are required to distribute paper copies of these proxy materials because of the subject matter of the business to be conducted at the special meeting.

 

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When and where is the special meeting?

Our special meeting will take place on April 16, 2012, at 8:00 a.m. local time, in Auditorium 1, on Level Two of Williams Tower, 2800 Post Oak Boulevard, Houston, Texas 77056. Only stockholders of record on March 8, 2012, are invited to attend the special meeting and may vote on the proposals described in this proxy statement/prospectus.

Who is soliciting my proxy?

Proxies are being solicited by our Board.

Who is paying for the cost of this proxy solicitation?

We are paying the costs of soliciting proxies. Upon request, we will reimburse brokers, banks, trusts and other nominees for reasonable expenses incurred by them in forwarding the proxy materials to beneficial owners of shares of our common stock.

In addition to soliciting proxies by mail and over the Internet, our Board, our officers and employees, or our transfer agent, may solicit proxies on our behalf, personally or by telephone, and we have engaged a proxy solicitor to solicit proxies on our behalf by telephone and by other means. We expect the cost of our private proxy solicitor to be approximately US$18,500. We will also solicit proxies by e-mail from stockholders who are employees or who previously requested proxy materials be sent electronically. Arrangements also may be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of shares of common stock of Rowan Delaware held by those persons, and we will reimburse such persons for reasonable expenses incurred by them in connection with the forwarding of solicitation materials.

Whom should I contact with questions?

We have retained Innisfree M&A Incorporated as proxy solicitor in connection with the special meeting. Our stockholders may contact our proxy soliciting agent at:

Innisfree M&A Incorporated

501 Madison Avenue

New York, New York 10022

Banks and Brokers may call (212) 750-5833

All others may call toll-free at (888) 750-5834

Alternatively, you may obtain information from us by contacting our Investor Relations Department by telephone at (713) 960-7517, or by mail at:

Rowan Companies, Inc.

Attn: Investor Relations Department

2800 Post Oak Boulevard, Suite 5450

Houston, Texas 77056

What is the quorum requirement for the special meeting?

For purposes of the special meeting, the holders of at least a majority of the shares of common stock of Rowan Delaware outstanding and entitled to vote at the special meeting will constitute a quorum. For purposes of determining whether there is a quorum, abstentions and broker “non-votes” are treated as shares that are present. For further information, see “What happens if I do not give specific voting instructions? How are broker non-votes treated?” and “How are abstentions treated?”

 

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What is the difference between holding shares as a stockholder of record and as a beneficial owner of shares held in street name?

Stockholders of Record. If your shares are registered directly in your name with our transfer agent, you are a “stockholder of record” with respect to those shares, and this proxy statement/prospectus was sent directly to you by us. As a record holder, you vote your shares directly by following the instructions set forth in the enclosed proxy card.

Beneficial Owners of Shares Held in Street Name. If your shares are held in the name of a broker, bank, trust or other nominee as a custodian, or in the general account of the broker or other organization, you are a “street name” holder. Consequently, this proxy statement/prospectus was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the special meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account by executing a voting instruction card. You should receive information regarding voting instructions directly from that organization.

If I am a stockholder of Rowan Delaware, how do I vote?

Stockholders of Record. If you are a “stockholder of record,” you have several choices. You can vote your shares by following the specific instructions provided on the proxy card:

 

   

via the Internet at www.proxyvote.com;

 

   

over the telephone by calling (800) 690-6903; or

 

   

by mailing in the proxy card.

Beneficial Owners of Shares Held in Street Name. If you hold your shares in “street name,” your broker, bank, trust or other nominee will arrange to provide materials and instructions for voting your shares.

Beneficial Owners of Shares Held in the Rowan Savings Plan. If you hold your shares indirectly in the Rowan Companies, Inc. savings plan, you have the right to direct the trustee of the plan how to vote as described on the separate instruction card sent to you by Fidelity.

What happens if I do not provide specific voting instructions? How are broker non-votes treated?

Stockholders of Record. All properly executed proxy cards received by the Board from stockholders of record that do not specify how stock should be voted will be voted “FOR” the proposal to adopt the merger agreement, “FOR” the proposal to approve the mandatory offer provisions and “FOR” the proposal to approve the declassification provisions and the other proposal. With respect to any other matter that may properly be brought before the special meeting, the shares shall be voted in accordance with the judgment of the person or persons named on the proxy card.

Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in “street name” and do not provide the organization that holds your shares with specific voting instructions, under the rules of the NYSE, the organization that holds your shares may not vote on these matters as they are “non-routine” matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter or otherwise elects not to vote your shares in the absence of your direction on a routine matter, the organization that holds your shares will inform our Inspector of Election that it does not have the authority (or otherwise declines) to vote on such matter with respect to your shares. This is generally referred to as a “broker non-vote.” All proposals are regarded as non-routine matters.

 

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We encourage you to provide voting instructions to the organization that holds your shares by carefully following the instructions provided in the proxy card or voting instruction card.

Beneficial Owners of Shares Held in the Rowan Savings Plan. If you hold your shares indirectly in the Rowan Companies, Inc. savings plan and do not provide the trustee specific voting instructions, the trustee will vote your shares in the same proportion and direction as shares held by the trustee for which voting instructions were received.

Can I vote my shares in person at the special meeting?

Stockholders of Record. If you are a “stockholder of record,” you may vote your shares in person at the special meeting.

Beneficial Owners of Shares Held in Street Name. If you hold your shares in “street name,” you must obtain a proxy from your broker, bank, trust or other nominee giving you the right to vote the shares at the special meeting.

Beneficial Owners of Shares Held in the Rowan Savings Plan. If you hold your shares indirectly in the Rowan Companies, Inc. savings plan, you do not have the right to vote such shares in person at the special meeting.

How are abstentions treated?

For quorum purposes, in determining the number of votes cast for a proposal, shares abstaining from voting or not voted on a matter will be counted. In determining whether Proposal 1, Proposal 2 and Proposal 3 have been approved, however, shares abstaining from voting or not voted will be treated as votes AGAINST such proposals. Shares abstaining from voting with respect to Proposal 4 will be treated as votes AGAINST such proposal and shares not voted will have no effect on such proposal.

May I change my vote after I have voted?

You may revoke your proxy or otherwise change your vote by doing one of the following:

 

   

by sending a written notice of revocation to the Rowan Delaware’s Corporate Secretary at 2800 Post Oak Boulevard, Suite 5450, Houston, Texas 77056, that must be received prior to the special meeting, stating that you revoke your proxy;

 

   

by signing and submitting a later-dated proxy card that must be received prior to the special meeting in accordance with the instructions included in the proxy card; or

 

   

by attending the special meeting and voting your shares in person.

If you voted electronically, you can also return to www.proxyvote.com and change your vote before the special meeting. Follow the same voting process and your original vote will be superseded.

If you are a beneficial owner of shares and a broker or other nominee holds your shares, you can revoke your proxy or otherwise change your vote by following the instructions provided by your broker or other nominee.

If you hold your shares indirectly in the Rowan Companies, Inc. savings plan, you can change your voting instructions to the trustee by following the instructions separately provided to you by Fidelity.

 

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Is my vote confidential?

Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the company or to third parties, except:

 

   

as necessary to meet applicable legal requirements;

 

   

to allow for the tabulation and certification of votes; and

 

   

to facilitate a successful proxy solicitation.

Where can I find the voting results of the special meeting?

The preliminary voting results will be announced at the special meeting and disclosed in a press release following the special meeting. The final voting results will also be tallied by the Inspector of Election and published in a report of voting results to be filed with the SEC promptly following the special meeting. We also intend to publicly disclose the voting results on our website within 14 days following the completion of the special meeting. You will be able to find the voting results on our website at www.rowancompanies.com.

 

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus and may not contain all of the information that is important to you. For a more complete description of the merger, the mandatory offer provisions and the declassification provisions, you should read carefully this entire proxy statement/prospectus, including the Annexes. See also “Where You Can Find More Information.” The merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, contains the terms and conditions of the merger. The New Articles as would be in effect after the merger will serve purposes substantially similar to the certificate of incorporation and bylaws of Rowan Delaware, subject to certain changes required to comply with the U.K. Companies Act 2006, or “Companies Act.” The New Articles will be substantially in the form attached to this proxy statement/prospectus as Annex B and will govern Rowan UK after the effective time of the merger, assuming the proposals to approve the mandatory offer provisions and the declassification provisions are approved by our stockholders.

THE MERGER

The Parties to the Merger (see page 34)

The parties to the merger described in this proxy statement/prospectus are related Rowan entities — Rowan Delaware and its subsidiary Rowan Mergeco.

Rowan Delaware is a major provider of global contract drilling services. We provide contract drilling services utilizing a fleet of 31 self-elevating mobile offshore drilling platforms. Organized in 1947 as a Delaware corporation under the name Rowan Drilling Company, Inc., Rowan Delaware is a successor to a contract drilling business conducted since 1923.

Rowan Mergeco is a newly formed Delaware limited liability company. Prior to the merger, Rowan Mergeco will become an indirect, wholly owned subsidiary of Rowan UK. Rowan Mergeco does not have a significant amount of assets or liabilities and has not engaged in any business since its formation other than activities associated with its anticipated participation in the merger.

Rowan UK is a newly formed English private limited company named “Rowan Companies Limited” and a subsidiary of Rowan Delaware. Prior to the merger, Rowan UK will re-register as an English public limited company named “Rowan Companies plc” or a similar name. Rowan UK does not have a significant amount of assets or liabilities and has not engaged in any business since its formation other than activities associated with its anticipated participation in the restructuring.

The Merger (see page 39)

Under the merger agreement, Rowan Mergeco will merge with and into Rowan Delaware, with Rowan Delaware surviving the merger as an indirect, wholly owned subsidiary of Rowan UK. As a result of the merger, each of our stockholders will have the right to receive the number of ADS equal to the number of shares of common stock of Rowan Delaware held immediately prior to the merger.

ADS represent ownership interests in the Class A Ordinary Shares that are on deposit with the depositary. If in certificated form, ADS are evidenced by ADRs. The depositary has appointed a custodian to safekeep the Class A Ordinary Shares on deposit. If you become an owner of ADS, you will become a party to the deposit agreement and therefore will be bound by its terms and by the terms of any ADR that evidences your ADS.

In connection with the merger, a number of Class A Ordinary Shares (which are represented by ADS) will have been issued equal to (i) the number of outstanding shares of common stock of Rowan Delaware

 

 

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immediately prior to the effective time of the merger (disregarding treasury shares and shares held by Rowan Delaware’s subsidiaries, which we expect to cancel (other than any shares held for the benefit of any employee or director benefit plan)), plus (ii) the remaining Class A Ordinary Shares of Rowan UK previously issued and deposited with National City Nominees Limited, as nominee of Citibank, (in respect of an equal number of ADS) that will be held by Rowan Delaware or its designee after the merger and will be used in connection with outstanding and future grants or awards pursuant to equity incentive plans maintained or sponsored by Rowan UK or its subsidiaries. Our Board reserves the right to postpone or abandon the merger at any time, including after stockholder approval. Please see “Risk Factors — Our Board may choose to postpone or abandon the merger at any time,” as well as other risk factors set forth under “Forward-Looking Statements” and “Risk Factors.”

Upon completion of the merger, our business and operations will continue in substantially the same manner except that Rowan UK will be the parent company of the Rowan group of companies and you will own ADS representing shares in an English company instead of stock of a Delaware corporation.

Reasons for the Merger (see page 35)

In reaching its decision to approve the adoption of the merger agreement and the merger and recommend them to you, our Board identified several potential benefits, which are described below under “Proposal 1 — Approval of the Adoption of the Merger Agreement — Background and Reasons for the Merger.” We anticipate that the merger and restructuring will result in, among other anticipated benefits:

 

   

enhancing stockholder value by our becoming more competitive in our industry for the long term;

 

   

increasing our long-term flexibility in terms of the markets in which we operate and furthering our global business efforts to evolve into a more geographically diversified company as seen by our recent business activity:

 

   

we expect 81 percent of our revenues in 2012 to be generated outside the U.S., compared to 2004 when only 10 percent of our revenues were generated outside the U.S.,

 

   

96 percent of our current contract backlog is from markets outside the U.S., and

 

   

eight of our top ten customers in 2012, by revenues, are headquartered outside the U.S.;

 

   

increasing our focus on our U.K.-managed operations, which represent our largest source of revenues this year:

 

   

38 percent of our worldwide revenues in 2012 will be managed by the U.K. operations group,

 

   

59 percent of our contract backlog is related to contracts that will be managed by our U.K. group,

 

   

approximately 750 of our employees work in the North Sea region, and

 

   

six of our seven largest and highest day rate jack-ups are in the North Sea;

 

   

facilitating our global operations management and communications by substantially increasing the amount of time our Board and management team spends in the U.K., which is a significant operational area for us and is centrally located between our second and third largest regions, the Middle East and the Gulf of Mexico;

 

   

putting us on the same footing with our major competitors, most of which are domiciled overseas;

 

   

availing ourselves of a more favorable structure from which to acquire or partner with other companies in our industry;

 

   

enhancing our access to potential U.K. and European institutional investors and facilitating increases to that investor base; and

 

 

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locating us in a country with a stable and well-developed legal system that we believe encourages high standards of corporate governance and provides shareholders with substantial rights.

Refer to “Forward-Looking Statements” and “Risk Factors” below for a description of certain risks associated with the restructuring.

Conditions to Completion of the Merger (see page 41)

The merger will not be completed unless the following conditions, among others, are satisfied or, if allowed by law or the merger agreement, waived:

 

   

the merger agreement will have been adopted by the requisite vote of Rowan Delaware stockholders;

 

   

following stockholder approval of the merger agreement and the transfer of all ADRs to Rowan Mergeco, the restructuring will have been completed such that Rowan Mergeco and the intermediate holding company will have become subsidiaries of Rowan UK;

 

   

Rowan UK will have re-registered as a public limited company;

 

   

Rowan Delaware will have received lender consents or waivers under, and/or otherwise amended, its credit arrangements, as applicable;

 

   

a special resolution will have been passed to alter the rights of the holders of the Class A Ordinary Shares to have the same rights as holders of Class B Ordinary Shares, nominal value £1.00 each, or “Class B Ordinary Shares,” conditional upon the merger becoming unconditional;

 

   

the ADS will have been authorized for listing on the NYSE, subject to official notice of issuance;

 

   

Baker & McKenzie LLP, legal and tax counsel to Rowan Delaware and Rowan UK, and Ernst & Young LLP, tax advisor to Rowan Delaware and Rowan UK, each will have delivered a tax opinion, as of the effective date of the merger, addressing the U.S. federal income tax consequences of the merger to Rowan UK under Section 7874 of the U.S. Internal Revenue Code of 1986, as amended (which we refer to as the “Code”) in form and substance acceptable to Rowan Delaware and Rowan UK;

 

   

the registration statement of which this proxy statement/prospectus is a part shall have become effective under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and no stop order with respect thereto shall be in effect;

 

   

a registration statement on Form F-6 filed with the SEC in connection with the issuance of the ADS to be delivered pursuant to the merger will have become effective under the Securities Act, and no stop order with respect thereto shall be in effect;

 

   

upon the SEC’s declaration of effectiveness of the registration statement on Form S-4 (of which this proxy statement is a part) with respect to the merger, Rowan Delaware will have transferred all ADRs to Rowan Mergeco;

 

   

no decree, order or injunction will have been in effect with respect to the SEC registration statement of which this proxy statement/prospectus is a part; and

 

   

no law or order prohibiting or pending lawsuit seeking to prohibit the merger will have been issued or filed by any competent U.S., European Union or U.K. governmental entity, subject to certain exceptions described in this proxy statement/prospectus.

Our Board does not intend to waive (where capable of waiver) any of these or any other conditions unless it determines that the merger is in the best interests of Rowan Delaware, our stockholders and Rowan UK despite the condition(s) not being satisfied in whole or in part. Notwithstanding the foregoing, our Board reserves the right to postpone or abandon the merger at any time, including after stockholder approval, including for the reasons described under “Risk Factors — Our Board may choose to postpone or abandon the merger at any time.”

 

 

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In addition, the expected timing for the completion of the restructuring may be impacted by other conditions described in this proxy statement/prospectus.

Regulatory Approvals (see page 44)

The only material governmental or regulatory laws, regulations or actions that we must comply with to complete the merger are compliance with U.S. federal and state securities laws, U.K. securities laws, the NYSE rules and regulations, the Delaware General Corporation Law, or “DGCL,” and the Companies Act.

Rights of Dissenting Stockholders (see page 44)

Under the DGCL, you will not have appraisal rights in connection with the merger.

Accounting Treatment of the Merger (see page 45)

The merger will be accounted for using the historical cost basis method of accounting. Because the merger will be accounted for as a reorganization of entities under common control, there will be no revaluation of Rowan Delaware’s assets and liabilities.

TAX CONSIDERATIONS

Taxation of Rowan Delaware and Rowan UK (see pages 58 and 67)

We believe that Rowan Delaware and Rowan UK will not incur any significant taxes as a result of the merger. Although changes in tax laws, treaties or regulations or the interpretation or enforcement of these tax laws, treaties or regulations could adversely affect the intended tax benefits of the merger to Rowan UK and its subsidiaries or the tax treatment of the post-merger corporate structure of Rowan UK, we do not believe that any of such changes would result in a material increase in taxes as compared to our current, pre-merger tax position.

Taxation of Stockholders

U.S. Tax Considerations (see page 52)

For U.S. federal income tax purposes, the conversion of each outstanding share of common stock of Rowan Delaware into the right to receive one ADS upon the consummation of the merger generally will be treated as an exchange of such share for one ADS. Therefore, the U.S. federal income tax discussion contained herein refers to an “exchange” rather than a “conversion” in describing the U.S. federal income tax consequences of the merger.

Taxation of U.S. Holders

Generally, for U.S. federal income tax purposes, a U.S. holder should recognize gain, if any, but not loss, on the receipt of ADS in exchange for shares of common stock of Rowan Delaware in the merger. A U.S. holder should generally recognize gain equal to the excess, if any, of the fair market value of the ADS received in the merger over the U.S. holder’s adjusted tax basis in its shares of common stock of Rowan Delaware exchanged therefor. In determining the amount of gain recognized, each of the shares of common stock of Rowan Delaware transferred should be treated as the subject of a separate exchange. Thus, if a U.S. holder transfers some shares of common stock of Rowan Delaware on which gains are realized and other shares of common stock of Rowan Delaware on which losses are realized, the U.S. holder may not net the losses against the gains to determine the amount of gain recognized. Generally, the gain should be capital in nature. U.S. holders should not be permitted to recognize any loss realized on the exchange of their shares of common stock of Rowan Delaware in the merger. In the case of a loss, the adjusted tax basis in each ADS received by a U.S. holder should equal the adjusted tax basis of each share of common stock of Rowan Delaware exchanged therefor. Thus, subject to

 

 

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changes in the fair market value of the ADS, any loss should be preserved. In addition, the holding period for any ADS received by U.S. holders should include the holding period of the shares of common stock of Rowan Delaware exchanged therefor. Please see “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders.”

Taxation of Non-U.S. Holders

A non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on gain realized, if any, on the exchange of shares of common stock of Rowan Delaware for ADS.

U.K. Tax Considerations (see page 63)

Taxation of U.K. Holders

Generally, U.K. resident stockholders of Rowan Delaware may realize a chargeable gain or an allowable loss for U.K. corporation tax or capital gains tax purposes (as the case may be) as a result of the merger, which will be treated as giving rise to a disposal of their shares of common stock of Rowan Delaware. In general, you will be treated as acquiring the ADS received in the merger for a consideration equal to the market value at the effective time of the merger of your shares of common stock of Rowan Delaware converted in the merger. Please see “Material Tax Considerations Relating to the Merger — U.K. Tax Considerations — Material Tax Consequences to Shareholders.”

Taxation of Non-U.K. Holders

Generally, non-U.K. resident stockholders of Rowan Delaware should not be subject to either U.K. corporation tax or capital gains tax on a chargeable gain or allowable loss arising as a result of the merger, unless they carry on a trade in the U.K. through a permanent establishment in the U.K. or through a branch or agency in the U.K. for the purposes of U.K. corporation tax or capital gains tax respectively, and the stock is attributable to that permanent establishment, branch or agency. In those circumstances, the non-U.K. resident stockholders may realize a chargeable gain or an allowable loss for U.K. corporation tax or capital gains tax purposes (as the case may be) as a result of the merger, which will be treated as giving rise to a disposal of their stock in Rowan Delaware. In general, you will be treated as acquiring the ADS received in the merger for a consideration equal to the market value at the effective time of the merger.

Other Tax Considerations

For stockholders of Rowan Delaware who are citizens or residents of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax treatment of the merger will depend on the applicable tax laws in such country.

WE ENCOURAGE YOU TO READ THE SECTIONS ENTITLED “MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER — U.S. FEDERAL INCOME TAX CONSIDERATIONS — MATERIAL TAX CONSEQUENCES TO STOCKHOLDERS,” AND “MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER — U.K. TAX CONSIDERATIONS — MATERIAL TAX CONSEQUENCES TO SHAREHOLDERS” FOR A MORE DETAILED DESCRIPTION OF THESE TAX CONSIDERATIONS. WE ALSO URGE YOU TO CONSULT YOUR OWN TAX ADVISOR PRIOR TO THE SPECIAL MEETING REGARDING THE PARTICULAR TAX CONSIDERATIONS OF THE MERGER APPLICABLE TO YOU.

 

 

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OTHER INFORMATION

Ownership in Rowan UK; Conversion of Shares (see page 40)

Your ownership of ADS will be recorded in book-entry form by your broker if you are currently a beneficial holder of shares of common stock of Rowan Delaware, with no need for any additional action on your part. If you hold shares directly, following the effective time of the merger, ADRs evidencing ADS will be delivered to the exchange agent for delivery to you or registration in uncertificated form upon surrender of the certificates representing shares of common stock of Rowan Delaware as set forth in the letter of transmittal. If you hold your shares indirectly in the Rowan Companies, Inc. savings plan, your indirect ownership of ADS will be recorded in book-entry form by the trustee with no need for any additional action on your part. Please see “Proposal 1 — Approval of the Adoption of the Merger Agreement — Ownership in Rowan UK; Conversion of Shares” for further information, including procedures for surrendering stock certificates.

Rights of Stockholders/Shareholders (see page 44)

There are differences between the principal attributes of the shares of common stock of Rowan Delaware and the Class A Ordinary Shares represented by the ADS, which include differences between the rights of stockholders under the DGCL and the rights of shareholders under the Companies Act, differences between the provisions of Rowan Delaware’s certificate of incorporation and bylaws and the New Articles, and differences between the rights of a holder of Rowan Delaware common stock and the terms and conditions related to the ADS as described in the deposit agreement. Please see “Description of American Depositary Shares of Rowan UK,” “Description of the Class A Ordinary Shares of Rowan UK” and “Comparison of Rights of Stockholders/Shareholders.”

Stock Exchange Listings (see page 44)

It is a condition to the completion of the merger that the ADS representing Class A Ordinary Shares will be authorized for listing on the NYSE, subject to official notice of issuance and satisfaction of other standard conditions. We will submit an application to the NYSE and anticipate that, immediately following the effective time of the merger, the ADS will be listed on the NYSE under the symbol “RDC,” which is the same symbol under which shares of common stock of Rowan Delaware are currently listed.

Market Price Information

On February 27, 2012, the last trading day before the public announcement of the merger, the closing price of our shares on the NYSE was US$38.53 per share. On March 5, 2012, the most recent practicable date before the date of this proxy statement/prospectus, the closing price of our shares was US$35.54 per share.

Recommendation of the Board (see pages 45, 49 and 51)

Our Board has unanimously determined that the merger, the mandatory offer provisions and the declassification provisions in the New Articles, are advisable and in the best interests of Rowan Delaware and our stockholders and, as such, has unanimously approved the merger, the merger agreement, the mandatory offer provisions and the declassification provisions. The Board recommends that you vote “FOR” the adoption of the merger agreement, “FOR” the approval of the mandatory offer provisions and “FOR” the approval of the declassification provisions.

 

 

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Special Meeting of Stockholders (see page 9)

You can vote at the special meeting if you owned shares of common stock of Rowan Delaware at the close of business on March 8, 2012. On that date, there were approximately 123,562,295 shares of common stock of Rowan Delaware outstanding and entitled to vote. The majority of the outstanding shares of common stock of Rowan Delaware entitled to vote at the special meeting must be voted “FOR” the adoption of the merger agreement in order for the merger to proceed. The same majority must vote “FOR” the approval of the mandatory offer provisions and “FOR” the approval of the declassification provisions in order for either of those two provisions to be included in the New Articles. Proposal 4 will be approved upon establishment of a quorum if the votes cast in favor of such proposal exceed the votes cast opposing such proposal. The adoption of the merger agreement in Proposal 1 is not conditional upon the approval of either Proposal 2 or Proposal 3, respectively. As of January 31, 2012, our directors and executive officers beneficially owned, in the aggregate, approximately 1.44 percent of the outstanding shares of common stock of Rowan Delaware as of that date. These shares are included in the number of shares entitled to vote at the special meeting.

 

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table sets forth the selected historical consolidated financial data for Rowan Delaware for each of the last five full fiscal years, which have been derived from our audited consolidated financial statements.

The selected historical financial data below should be read in conjunction with the consolidated financial statements and their accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2011, and other financial information incorporated by reference.

 

     Year ended December 31,  
     2011     2010     2009     2008     2007  
     (Dollars in thousands, except per share amounts)  

Operations

          

Revenues:

   $ 939,229      $ 1,017,705      $ 1,043,003      $ 1,210,853      $ 1,145,248   

Costs and expenses:

          

Direct operating costs (excluding items shown below)

     508,066        416,832        404,313        480,057        445,567   

Depreciation and amortization

     183,903        138,301        123,940        97,686        78,642   

Selling, general and administrative

     88,278        78,658        65,953        62,006        61,071   

(Gain) loss on disposals of property and equipment

     (1,577     402        (5,543     (22,996     (25,057

Material charges and other operating expenses (1)

     10,976        5,250        —          24,635        —     

Gain on hurricane-related events

     —          —          —          (37,088     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     789,646        639,443        588,663        604,300        560,223   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     149,583        378,262        454,340        606,553        585,025   

Other income (expense) — net

     (19,503     (18,727     (6,822     6,404        12,647   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations, before income taxes

     130,080        359,535        447,518        612,957        597,672   

Provision (benefit) for income taxes

     (5,659     91,934        119,186        207,431        206,452   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     135,739        267,601        328,332        405,526        391,220   

Discontinued operations, net of taxes (2)

     601,102        12,394        39,172        22,102        92,580   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 736,841      $ 279,995      $ 367,504      $ 427,628      $ 483,800   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic income per common share:

          

Income from continuing operations

   $ 1.09      $ 2.29      $ 2.89      $ 3.60      $ 3.53   

Income from discontinued operations

     4.80        0.10        0.35        0.20        0.83   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 5.89      $ 2.39      $ 3.24      $ 3.80      $ 4.36   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income per common share:

          

Income from continuing operations

   $ 1.07      $ 2.25      $ 2.89      $ 3.58      $ 3.48   

Income from discontinued operations

     4.76        0.11        0.35        0.19        0.83   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 5.83      $ 2.36      $ 3.24      $ 3.77      $ 4.31   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financial Position

          

Cash and cash equivalents

   $ 438,853      $ 437,479      $ 639,681      $ 222,428      $ 284,458   

Property, plant and equipment — net

   $ 5,678,713      $ 4,344,522      $ 3,093,591      $ 2,627,906      $ 1,986,247   

Total assets

   $ 6,597,845      $ 6,217,457      $ 5,210,694      $ 4,548,892      $ 3,875,305   

Long-term debt, less current portion

   $ 1,089,335      $ 1,133,745      $ 787,490      $ 355,560      $ 420,482   

Stockholders’ equity

   $ 4,325,987      $ 3,752,310      $ 3,110,370      $ 2,659,816      $ 2,348,438   

Statistical Information

          

Book value per share of common stock outstanding

   $ 35.01      $ 29.71      $ 27.31      $ 23.51      $ 21.10   

Price range of common stock:

          

High

   $ 44.83      $ 35.39      $ 27.54      $ 47.94      $ 46.16   

Low

   $ 28.13      $ 20.44      $ 10.28      $ 12.00      $ 29.48   

Cash dividends per share

   $ —        $ —        $ —        $ 0.40      $ 0.40   

 

(1) Material charges and other operating expenses consisted of the following: 2011 — a US$6.1 million payment to settle a lawsuit in connection with the Company’s obligation under a charter agreement for the Rowan Halifax and US$4.9 million of incremental noncash and cash compensation cost in connection with the separation of an employee; 2010 — the expected cost of terminating the Company’s agency agreement in Mexico; and 2008 — US$11.8 million of impairment charges for the cancellation of construction of a fourth 240C jack-up rig, US$8.5 million of severance costs, US$2.8 million of investment banking and legal fees, and US$1.5 million for goodwill impairment.
(2) In 2011, the Company sold its manufacturing and land drilling operations. Operating results for manufacturing and land drilling have been reclassified to discontinued operations for each year presented.

 

 

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SUMMARY PRO FORMA FINANCIAL INFORMATION

Pro forma financial statements for Rowan UK are not presented in this proxy statement/prospectus because no significant pro forma adjustments are required to be made to the historical audited consolidated financial statements of Rowan Delaware for the year ended December 31, 2011.

FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains forward-looking statements that are subject to a number of risks and uncertainties and are based on information as of the date hereof. Forward-looking statements include words such as “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” “project,” “could,” “should,” “may,” “might” or similar expressions. The forward-looking statements include, but are not limited to, statements about the restructuring to be effected by the merger, the mandatory offer provisions, the declassification provisions and our plans, objectives, expectations and intentions with respect thereto and with respect to future operations, including the benefits and tax savings or impact described in this proxy statement/prospectus that we expect to achieve as a result of the restructuring. Forward-looking statements also specifically include statements regarding expected financial performance; expected utilization, day rates, revenues, operating expenses, contract term, contract backlog, capital expenditures, insurance, financing and funding; the timing of availability, delivery, mobilization, contract commencement or relocation or other movement of rigs; future rig construction and costs (including construction in progress and completion thereof), enhancement, upgrade or repair and timing thereof; the suitability of rigs for future contracts; general market, business and industry conditions, trends and outlook; future operations; increased regulatory oversight; expected contributions from our rig fleet expansion program and our entry into the deepwater market; expense management; and the likely outcome of legal proceedings or insurance or other claims and the timing thereof.

Forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Among the factors that could cause actual results to differ materially are the following:

 

   

the failure of the merger agreement to be adopted by our stockholders;

 

   

the postponement or abandonment of the merger by our Board at any time;

 

   

changes in foreign or domestic laws, including tax laws, that could effectively preclude us from completing the merger or reduce or eliminate the benefits we expect to achieve from the restructuring;

 

   

any other inability to realize expected benefits from the merger or the occurrence of difficulties in connection with the merger;

 

   

any negative publicity resulting from the proposed merger having an adverse effect on our business;

 

   

an SEC stop order or other action or any other decree, order or injunction preventing the registration statement of which this proxy statement/prospectus is a part from becoming or remaining effective or preventing us from holding the special meeting or completing the merger;

 

   

an inability to satisfy all of the conditions to closing set forth in the merger agreement;

 

   

costs related to the merger, which could be greater than expected;

 

   

the continued impact of the Macondo well incident on offshore drilling operations, including current and future actual or de facto drilling permit and operations delays, moratoria or suspensions, new and future regulatory, legislative or permitting requirements (including requirements related to certification and testing of blow-out preventers and other equipment or otherwise impacting operations), changes in

 

 

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laws, rules and regulations that have or may impose increased financial responsibility, additional oil spill abatement contingency plan capability requirements and other governmental actions that may result in claims by our customers of force majeure or otherwise adversely affect our existing drilling contracts;

 

   

other governmental regulatory, legislative and permitting requirements affecting drilling operations, including limitations on drilling locations, such as the Gulf of Mexico during hurricane season;

 

   

changes in worldwide rig supply and demand, competition or technology, including as a result of delivery of newbuild drilling rigs;

 

   

future levels of drilling activity and expenditures, whether as a result of global capital markets and liquidity, prices of oil and natural gas or otherwise, which may cause us to idle or stack additional rigs;

 

   

downtime and other risks associated with offshore rig operations or rig relocations, including rig or equipment failure, damage and other unplanned repairs, the limited availability of transport vessels, hazards, self-imposed drilling limitations and other delays due to severe storms and hurricanes and the limited availability or high cost of insurance coverage for certain offshore perils, such as hurricanes in the Gulf of Mexico or associated removal of wreckage or debris;

 

   

possible cancellation or suspension of drilling contracts as a result of mechanical difficulties, performance or other reasons;

 

   

risks inherent to shipyard rig construction, repair or enhancement, unexpected delays in equipment delivery and engineering or design issues following shipyard delivery, or changes in the dates our rigs will enter a shipyard, be delivered, return to service or enter service;

 

   

actual contract commencement dates;

 

   

environmental or other liabilities, risks or losses, whether related to storm or hurricane damage, losses or liabilities (including wreckage or debris removal) or otherwise;

 

   

our ability to attract and retain skilled personnel on commercially reasonable terms, whether due to competition from other contract drillers, labor regulations or otherwise;

 

   

governmental action and political and economic uncertainties, including uncertainty or instability resulting from civil unrest, political demonstrations, mass strikes, or an escalation or additional outbreak of armed hostilities or other crises in oil or natural gas producing areas of the Middle East or other geographic areas, which may result in expropriation, nationalization, confiscation or deprivation of our assets or result in claims of a force majeure situation;

 

   

terrorism, piracy or military action impacting our operations, assets or financial performance;

 

   

the outcome of legal proceedings, or other claims or contract disputes, including any inability to collect receivables or resolve significant contractual or day rate disputes, any purported renegotiation, nullification, cancellation or breach of contracts with customers or other parties and any failure to negotiate or complete definitive contracts following announcements of receipt of letters of intent; and

 

   

potential long-lived asset or goodwill impairments.

Moreover, the U.S. Congress, the IRS, the U.K. Parliament or HMRC may attempt to enact new statutory or regulatory provisions that could adversely affect Rowan UK’s tax status as a non-U.S. corporation or otherwise adversely affect Rowan UK’s anticipated global tax position following the restructuring. Retroactive statutory or regulatory actions have occurred in the past, and there can be no assurance that any such provisions, if enacted or promulgated, would not have retroactive application to Rowan UK or the restructuring.

 

 

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The factors identified above are believed to be important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by us. Other factors not discussed herein could also have material adverse effects on us. All forward-looking statements included in this prospectus and any accompanying prospectus supplement are expressly qualified in their entirety by the foregoing cautionary statements. All forward-looking statements contained in this proxy statement/prospectus speak only as of the date of this document. We undertake no obligation to update or revise publicly any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this proxy statement/prospectus, or to reflect the occurrence of unanticipated events.

 

 

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RISK FACTORS

In considering whether to vote in favor of the proposals to adopt the merger agreement and approve the mandatory offer provisions and declassification provisions in connection with the restructuring, you should consider carefully the following risks or investment considerations, in addition to the other information in this proxy statement/prospectus. As set forth below, we have identified the material factors you should consider before making a decision on whether to vote in favor of the proposal to adopt the merger agreement and the other proposals described herein, and we have identified the material risks that could cause our actual plans or results to differ materially from those included in the forward-looking statements contained or incorporated by reference herein. You should consider these risks when deciding how to vote. In addition, you should also review carefully the risk factors discussed in Part I, Item 1A “Risk Factors” of our Form 10-K and in our subsequent reports filed pursuant to the Exchange Act, as they discuss risks affecting our business generally that could also cause our actual plans or results to differ materially from those included in the forward-looking statements contained or incorporated by reference herein.

Some Rowan Delaware stockholders should recognize a taxable gain as a result of the merger and should not be able to recognize any losses realized.

For U.S. federal income tax purposes, the conversion of each outstanding share of common stock of Rowan Delaware into the right to receive one ADS upon the consummation of the merger generally will be treated as an exchange of such share for one ADS. Therefore, the U.S. federal income tax discussion contained herein refers to an “exchange” rather than a “conversion” in describing the U.S. federal income tax consequences of the merger.

Generally, for U.S. federal income tax purposes, a U.S. holder, which is defined below in “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders,” should recognize gain, if any, but not loss, on the receipt of ADS in exchange for shares of common stock of Rowan Delaware in connection with the merger. A U.S. holder should generally recognize gain equal to the excess, if any, of the fair market value of the ADS received in the merger over the U.S. holder’s adjusted tax basis in its shares of common stock of Rowan Delaware exchanged therefor. In determining the amount of gain recognized, each of the shares of common stock of Rowan Delaware transferred should be treated as the subject of a separate exchange. Thus, if a U.S. holder transfers some shares of common stock of Rowan Delaware on which gains are realized and other shares of common stock of Rowan Delaware on which losses are realized, the U.S. holder may not net the losses against the gains to determine the amount of gain recognized. Generally, the gain should be capital in nature. U.S. holders should not be permitted to recognize any loss realized on the exchange of their shares of common stock of Rowan Delaware in the merger. In the case of a loss, the adjusted tax basis in each ADS received by a U.S. holder should equal the adjusted tax basis of each share of common stock of Rowan Delaware exchanged therefor. Thus, subject to changes in the fair market value of the ADS, any loss should be preserved. In addition, the holding period for any ADS received by U.S. holders should include the holding period of the shares of common stock of Rowan Delaware exchanged therefor. A non-U.S. holder generally will not be subject to U.S. federal income tax on gain realized, if any, on the exchange of shares of common stock of Rowan Delaware for ADS. Please see “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — Material Tax Consequences to Stockholders.”

Generally, U.K. resident stockholders of Rowan Delaware may realize a chargeable gain or an allowable loss for U.K. corporation tax or capital gains tax purposes (as the case may be) as a result of the merger, which will be treated as giving rise to a disposal of their shares of common stock of Rowan Delaware. Generally, non-U.K. resident stockholders of Rowan Delaware should not be subject to either U.K. corporation tax or capital gains tax as a result of the merger, unless they carry on a trade in the U.K. through a permanent establishment in the U.K. or through a branch or agency in the U.K. for the purposes of U.K. corporation tax or capital gains tax respectively, and the stock is attributable to that permanent establishment, branch or agency. In general, you will be treated as acquiring the ADS received in the merger for a consideration equal to the market

 

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value at the effective time of the merger of your shares of common stock of Rowan Delaware converted in the merger. Please see “Material Tax Considerations Relating to the Merger — U.K. Tax Considerations — Material Tax Consequences to Shareholders.”

For Rowan Delaware stockholders who are citizens or residents of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax treatment of the merger will depend on the applicable tax laws in such country.

WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR PRIOR TO THE SPECIAL MEETING REGARDING THE PARTICULAR TAX CONSIDERATIONS OF THE MERGER APPLICABLE TO YOU.

HMRC may disagree with our conclusions on the U.K. tax treatment of the merger to Rowan UK and its subsidiaries and HMRC has not provided a ruling on the U.K. tax aspects of the merger.

Based on current U.K. corporation tax law and the current U.K.-U.S. income tax treaty, as amended, and any amendments to either current U.K. corporation tax law or such treaty announced prior to the date hereof, we anticipate that the merger will not result in any material U.K. corporation tax liability to any of Rowan Delaware, Rowan UK, the intermediate holding company or Rowan Mergeco. Further, we believe that we have satisfied all stamp duty reserve tax, or “SDRT,” payment and filing obligations in connection with the issuance and deposit of the Class A Ordinary Shares into the ADS facility pursuant to the deposit agreement.

However, if HMRC disagrees with this view, it may take the position that material U.K. corporation tax or SDRT liabilities or amounts on account thereof are payable by any one or more of these companies as a result of the merger, in which case we anticipate that we would contest such assessment. To contest such assessment, we may be required to remit cash or provide security of the amount in dispute, or such lesser amount as permitted under U.K. law and acceptable to HMRC, to prevent HMRC from seeking enforcement actions pending the dispute of such assessment. If we were unsuccessful in disputing the assessment, the implications could be materially adverse to us. The Company has not requested or received any ruling from HMRC with respect to the U.K. tax consequences of the merger to the stockholders of Rowan Delaware, but may seek a ruling or other guidance from HMRC regarding a specific U.K. corporation tax consequence of the merger to Rowan UK or other matters if deemed appropriate by management. There can be no assurance that any such ruling or guidance would be received or, if received, that it would be in a form acceptable to the Company. There can be no assurance that HMRC will agree with our interpretation of the U.K. tax aspects of the merger or any related matters associated therewith.

The IRS may disagree with our conclusions on tax treatment of the merger to Rowan UK and its subsidiaries.

We anticipate that the merger will not result in any material U.S. federal income tax liability to any of Rowan Delaware, Rowan UK, the intermediate holding company or Rowan Mergeco. However, the IRS may disagree with our assessments of the effects, interpretation or enforcement of the tax laws, treaties or regulations with respect to the merger. Nevertheless, even if our conclusions on the U.S. tax treatment of the merger to any of Rowan Delaware, Rowan UK, the intermediate holding company or Rowan Mergeco do not ultimately prevail, we do not believe that a contrary treatment of the merger by the IRS would result in a material increase in U.S. federal income tax compared to our current, pre-merger U.S. federal income tax position. In this event however, we may not realize the expected tax benefits of the merger and our results of operations may be adversely affected in comparison to what they would have been if the IRS agreed with our conclusions.

 

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Rowan UK’s net income and cash flow would be reduced if Rowan UK becomes subject to U.S. corporate income tax.

Rowan UK and other non-U.S. Rowan UK affiliates generally will be subject to U.S. income taxation if they maintain a permanent establishment in the U.S. and earn income attributable to that permanent establishment. Although Rowan UK may maintain a U.S. permanent establishment based on certain of its employees and/or officers being located in the U.S., Rowan UK will conduct its operations in a manner intended to ensure that it will not earn a material amount of income attributable to that permanent establishment. In addition, other non-U.S. Rowan UK affiliates will conduct their operations in a manner intended to ensure that none of those affiliates maintain a permanent establishment in the U.S. However, if Rowan UK earns a material amount of income attributable to its U.S. permanent establishment or a non-U.S. Rowan UK affiliate maintains a U.S. permanent establishment to which a material amount of income is attributable, Rowan UK or such non-U.S. affiliate would be required to pay U.S. corporate income tax on such income. If this occurs, our results of operations may be adversely affected. Additionally, after the merger, Rowan Delaware and its then existing U.S. subsidiaries will continue to be subject to U.S. corporate income tax on their worldwide income, and Rowan Delaware’s then existing foreign subsidiaries will continue to be subject to U.S. corporate income tax on their U.S. operations.

Rowan UK may be treated as a U.S. corporation for U.S. federal income tax purposes following the merger.

Generally for U.S. federal income tax purposes, a corporation is considered tax resident in the place of its incorporation. Because Rowan UK is incorporated under U.K. law, it should be deemed a U.K. corporation under these general rules. However, Section 7874 of the Code generally provides that a corporation organized outside the U.S. which acquires substantially all of the assets of a corporation organized in the U.S. will be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes if stockholders of the acquired U.S. corporation own at least 80 percent (of either the voting power or the value) of the stock of the acquiring foreign corporation after the acquisition and the acquiring foreign corporation does not have substantial business activities in the country in which it is organized. Pursuant to the merger, Rowan UK will acquire directly or indirectly all of Rowan Delaware’s assets, and Rowan Delaware stockholders will hold 100 percent of Rowan UK by virtue of their stock ownership of Rowan Delaware. As a result, Rowan Delaware and, following the merger, Rowan UK must have substantial business activities in the U.K. for Rowan UK to avoid being treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code. There is no “safe harbor” or other expressly objective guidance that confirms when a foreign corporation’s business activities in its country of incorporation are deemed to be substantial. Therefore, it is possible that the IRS would interpret the Section 7874 “anti-inversion” rules so as to treat Rowan UK as a U.S. corporation after the consummation of the merger. Moreover, the U.S. Congress, the IRS, the U.K. Parliament or HMRC may enact new statutory or regulatory provisions that could adversely affect Rowan UK’s status as a non-U.S. corporation or otherwise adversely affect Rowan UK’s anticipated global tax position following the restructuring. Retroactive statutory or regulatory actions have occurred in the past, and there can be no assurance that any such provisions, if enacted or promulgated, would not have retroactive application to Rowan UK or the restructuring.

However, Rowan UK is a company formed under English law, and Rowan Delaware has historic, continuous and substantial business activities in the U.K. as a result of its longstanding North Sea drilling activities and management and control over the Europe and Africa business regions. We, therefore, believe Rowan UK should not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code. However, there is no certainty that the IRS will not assert a contrary position, in which case, we could become involved in tax controversy with the IRS regarding possible additional U.S. tax liability. If we are unsuccessful in resolving any such tax controversy in our favor, we would likely not realize the tax position we anticipate achieving through the merger. Please see “Material Tax Considerations Relating to the Merger — U.S. Federal Income Tax Considerations — The U.S. Anti-Inversion Rules.”

 

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The merger may not allow us to maintain a competitive worldwide effective tax rate.

Our worldwide effective tax rate is currently low (negative four percent for 2011), but it is expected to rise substantially in the future. We believe that the merger should improve our ability to maintain a long-term competitive worldwide effective tax rate because the U.K. corporation tax rate is lower than the U.S. corporate tax rate and because the U.K. has implemented a dividend exemption system that generally does not subject non-U.K. earnings to U.K. tax when such earnings are repatriated to the U.K. in the form of dividends from non-U.K. subsidiaries. In addition, a temporary exemption from the U.K. controlled foreign companies (“CFC”) rules (which, if applicable, could in some circumstances, cause low-taxed profits of foreign subsidiaries of U.K. companies to be taxed in the U.K.) is expected to apply to Rowan UK, subject to limited conditions, until December 31, 2014. After that date, proposed new CFC rules are expected to apply under which profits of any low-taxed foreign subsidiaries of Rowan UK may be taxed in the U.K. only if, broadly, there is an artificial diversion of U.K. profits and an exemption is not available. The U.K. Government published in December 2011 draft legislation for the proposed new CFC rules (updated and revised in January 2012) and it is expected that the new rules will be enacted later in 2012. While the effect that the new rules on Rowan UK after December 31, 2014, will not be clear until the new legislation is enacted in its entirety, the Board does not consider that the U.K. Government’s objectives in reforming the U.K. CFC rules should lead to Rowan UK being significantly disadvantaged.

However, we cannot provide any assurances as to what our effective tax rate will be after the merger because of, among other things, uncertainty regarding the nature and extent of our business activities in any particular jurisdiction in the future and the tax laws of such jurisdictions, as well as changes in U.S. and other tax laws. Our actual effective tax rate may vary from our expectation and that variance may be material. Additionally, the tax laws of the U.K. and other jurisdictions could change in the future, and such changes could cause a material change in our worldwide effective tax rate.

We also could be subject to future audits conducted by foreign and domestic tax authorities, and the resolution of such audits could significantly impact our effective tax rate in future periods, as would any reclassification or other matter (such as changes in applicable accounting rules) that increases the amounts we have provided for income taxes in our consolidated financial statements. There can be no assurance that we would be successful in attempting to mitigate the adverse impacts resulting from any changes in law, audits and other matters. Our inability to mitigate the negative consequences of any changes in the law, audits and other matters could cause our effective tax rate to increase and our results of operations to suffer.

U.S. tax authorities could treat Rowan UK as a “passive foreign investment company” following the merger, which could have adverse U.S. federal income tax consequences to U.S. holders.

A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes if either (1) at least 75 percent of its gross income for any taxable year consists of certain types of “passive income” or (2) at least 50 percent of the average value of the corporation’s assets produce or are held for the production of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest and gains from the sale or exchange of investment property and certain passive rents and royalties, but does not include income derived from the performance of services.

We believe that Rowan UK should not be a PFIC following the merger with respect to any taxable year. For purposes of determining whether we are a PFIC, we believe our income from offshore contract drilling services should be treated as rental income derived from the active conduct of a drilling rig leasing business. Accordingly, we believe that our income from our offshore contract drilling activities (i.e., rig leasing) should not constitute “passive income,” and the assets that we own and operate in connection with the production of that income should not constitute passive assets.

For U.S. federal income tax purposes not related to the PFIC regime, a 2009 Fifth Circuit Court of Appeals decision and an IRS pronouncement which, in part, follows such decision, characterize income from time

 

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chartering of vessels as rental income rather than services income. However, the IRS subsequently announced that it does not agree with, and will not acquiesce to, the decision by the Fifth Circuit Court of Appeals and further stated that the time charters at issue in the case would be treated as producing services income, which is not considered passive income for PFIC purposes. Nonetheless, based on the Fifth Circuit decision, we believe our income from offshore contract drilling activities (i.e., rig leasing) is rental income. We believe such income should not be treated as passive income because we engage in active leasing of our drilling rigs. Therefore, the assets that we own and operate in connection with the production of that income should not constitute passive assets, for PFIC purposes, because such income is derived from the active conduct of a leasing business. No assurance can be given that the IRS or a court will accept our position, and there is a risk that the IRS or a court could determine that we are a PFIC.

If we were to be treated as a PFIC for any taxable year, our U.S. shareholders would face adverse U.S. federal income tax consequences. Under the PFIC rules, unless a shareholder makes certain elections available under the Code (which elections could themselves have adverse consequences for such shareholder), such shareholder would be liable to pay U.S. federal income tax at the highest applicable income tax rates on ordinary income upon the receipt of excess distributions (as defined for U.S. tax purposes) and upon any gain from the disposition of our shares, plus interest on such amounts, as if such excess distribution or gain had been recognized ratably over the shareholder’s holding period of our shares. In addition, under applicable statutory provisions, the preferential 15 percent tax rate on “qualified dividend income,” which applies to dividends paid to non-corporate shareholders prior to 2013, does not apply to dividends paid by a foreign corporation if the foreign corporation is a PFIC for the taxable year in which the dividend is paid or the preceding taxable year.

It is likely that we will be removed from the S&P 500 stock index and other indices following the effective time of the merger, which could have an adverse impact on our share price.

Our shares currently are a component of the Standard & Poor’s 500 Index (“S&P 500”) and other indices. Based on current S&P 500 guidelines, we believe it is likely that the S&P 500 would remove our shares (or refuse to include the ADS after the effective time of the merger) as a component of the S&P 500 upon the effectiveness of the merger. Although we cannot be certain as to when the S&P 500 would take this action, we believe that it would be effective immediately upon completion of the merger. The S&P 500 has removed the shares of other companies that recently reincorporated to European jurisdictions, whether through a merger transaction similar to the type of merger transaction described in this proxy statement/prospectus or through other forms of transactions. While some of such European companies removed by the S&P 500 have been readmitted, there can be no assurance that our shares would be retained on or readmitted to the S&P 500 even if we were successful in making our Class A Ordinary Shares eligible for listing on the NYSE.

Similar issues could arise with respect to whether the ADS will be included as a component in other indices or funds that impose a variety of qualifications that could be affected by the merger. If the ADS are not included as a component of the S&P 500 or other indices or no longer meet the qualifications of such funds, institutional investors that are required to track the performance of the S&P 500 or such other indices or funds that impose those qualifications would be required to sell their ADS immediately, which could adversely affect the price of the ADS. Any such adverse impact on the price of our shares could be magnified by the current heightened volatility in the financial markets.

Our Board may choose to postpone or abandon the merger at any time.

Completion of the merger may be postponed or abandoned by action of our Board at any time, including after stockholder approval. While we currently expect the merger to occur promptly after the proposal to adopt the merger agreement is approved at the special meeting, the Board may postpone completion before or after the special meeting or may abandon the merger at any time, including after stockholder approval, because of, among other reasons:

 

   

the failure of the conditions in the merger agreement being met;

 

   

adverse changes in existing or proposed tax legislation or other laws;

 

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the inability of Baker & McKenzie LLP or Ernst & Young LLP to deliver tax opinions, as of the effective date of the merger, in form and substance acceptable to us;

 

   

our determination that HMRC does not agree with our view of the U.K. corporation tax or SDRT implications of certain aspects of the restructuring;

 

   

our determination that the IRS does not agree with our views on certain tax matters;

 

   

our determination that the restructuring would involve tax or other risks that outweigh their benefits;

 

   

our determination that the level of expected benefits associated with the restructuring would otherwise be reduced;

 

   

a dispute with the taxation authorities over the restructuring (or certain aspects thereof);

 

   

changes in U.K. or U.S. tax laws, rates, or regulations that would adversely affect our ability to achieve the expected benefits of the restructuring;

 

   

an unexpected increase in the cost to complete the restructuring; or

 

   

any other determination by our Board that the merger would not be in the best interests of the Company or our stockholders at such time or that the merger would have material adverse consequences to the Company or our stockholders.

Changes in domestic and foreign laws, including tax law changes, could adversely affect Rowan UK, its subsidiaries and its shareholders.

Changes in tax laws, regulations or treaties or the interpretation or enforcement thereof, in both or either of the U.S. or the U.K., could adversely affect the tax consequences of the restructuring to Rowan UK and its shareholders and/or our effective tax rate (whether associated with the restructuring or otherwise). With respect to the restructuring, for example, one reason for the restructuring is to begin to align our structure so as to have the opportunity, going forward, to continue to take advantage of U.K. corporation tax rates, which are lower than the U.S. corporate tax rates, and to take advantage of the dividend exemption system implemented in the U.K. in 2009, which generally does not subject non-U.K. earnings to U.K. tax when such earnings are repatriated to the U.K. as dividends. Future changes in tax laws, regulations or treaties or the interpretation or enforcement thereof, particularly any such changes resulting in a material change in the U.S. and the U.K. tax rates relative to each other, could reduce or eliminate the benefits that we expect to achieve from the restructuring.

The expected benefits of the merger and other aspects of the restructuring may not be realized.

We cannot be assured that all of the goals of the merger and other anticipated benefits of the restructuring will be achievable, particularly as the achievement of the benefits are in many important respects subject to factors that we do not control. These factors would include such things as the reactions of third parties with whom we enter into contracts and do business and the reactions of investors, analysts and U.K. and U.S. taxing authorities.

The expected post-restructuring benefits of lower U.K. tax rates and the U.K. dividend exemption system for certain non-U.K. source dividends repatriated to the U.K. may not be achieved. In particular, U.K. or U.S. tax authorities may challenge our application and/or interpretation of relevant tax laws, regulations or treaties, valuations and methodologies or other supporting documentation, and, if they are successful in doing so, we may not experience the level of tax benefits we anticipate or we may be subject to adverse tax consequences. Even if we are successful in maintaining our positions, we may incur significant expense in contesting positions asserted or claims made by tax authorities.

Our effective tax rates and the benefits described herein are also subject to a variety of other factors, many of which are beyond our ability to control, such as changes in the rate of economic growth in the U.K. and the U.S., the financial performance of our business in various jurisdictions, currency exchange rate fluctuations

 

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(especially as between the British pound and the U.S. dollar), and significant changes in trade, monetary or fiscal policies of the U.K. or the U.S., including changes in interest rates. The impact of these factors, individually and in the aggregate, is difficult to predict, in part because the occurrence of the events or circumstances described in such factors may be (and, in fact, often seem to be) interrelated, and the impact to us of the occurrence of any one of these events or circumstances could be compounded or, alternatively, reduced, offset, or more than offset, by the occurrence of one or more of the other events or circumstances described in such factors.

Your rights as a stockholder of Rowan Delaware will change as a result of the merger in a manner that may be less favorable to you, including with respect to takeover matters or as a result of the mandatory offer provisions or declassification provisions in the New Articles, if Proposals 2 and 3 are approved by our stockholders.

The consummation of the merger will change the governing law that applies to our stockholders from Delaware law (which applies to shares of common stock of Rowan Delaware) to English law (which applies to the Class A Ordinary Shares) and New York contract law (which applies under the deposit agreement). Some of the principal attributes of the shares of common stock of Rowan Delaware and the Class A Ordinary Shares will be similar. There are, however, several significant differences between the rights of stockholders under Delaware law and shareholders under English law, and there are differences between our current certificate of incorporation and bylaws and the proposed New Articles that will apply to our stockholders after the consummation of the merger through the ADS arrangements contemplated by the deposit agreement, including with respect to voting rights, takeover matters and the mandatory offer provisions or declassification provisions of the New Articles as proposed to be adopted. For a detailed discussion of these differences, see “Description of Class A Ordinary Shares of Rowan UK — Voting Rights” and “Comparison of Rights of Stockholders/Shareholders.”

Your rights as a holder of Rowan UK ADS will be different from your rights as a stockholder of Rowan Delaware.

If the merger is completed, you will hold ADS representing Class A Ordinary Shares of Rowan UK. As a result, your rights will be governed by the deposit agreement, which is summarized in “Description of American Depositary Shares of Rowan UK.” Your ability to exercise the rights of a shareholder of Rowan UK will be more limited and may require you to surrender your ADS to the depositary and withdraw the Class A Ordinary Shares represented thereby for many actions, such as to make proposals at meetings of shareholders, nominate directors, call a general meeting of shareholders or seek to remove directors. In addition, as a holder of ADS, you will be required to submit voting instructions to the depositary several days before the voting cut-off date for holders of Class A Ordinary Shares. You will also be subject to certain fees and expenses in connection with the issuance, deposit, cancellation and withdrawal of ADS. See “Description of American Depositary Shares of Rowan UK.” We are currently evaluating ways of making the Class A Ordinary Shares eligible for deposit, book-entry and clearing services at The Depository Trust Company, or “DTC,” thereby making such shares eligible for listing on the NYSE in lieu of ADS. In such event, Rowan UK shareholders would be able to readily hold and trade Class A Ordinary Shares instead of ADS. It would also eliminate the ADS deposit arrangement. There can be no assurance that we will be successful in doing so or that, if successful, the costs to shareholders of transferring shares will not be higher.

The enforcement of civil liabilities against Rowan UK may be more difficult.

Because Rowan UK will be a public limited company incorporated under English law, after the effective time of the merger investors could experience more difficulty enforcing judgments obtained against Rowan UK in U.S. courts than would currently be the case for U.S. judgments obtained against Rowan Delaware. In addition, it may be more difficult (or impossible) to bring some types of claims against Rowan UK in courts in the U.K. than it would be to bring similar claims against a U.S. company in a U.S. court.

 

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The market for ADS representing Class A Ordinary Shares may differ from the current market for shares of common stock of Rowan Delaware.

Although it is anticipated that the ADS will be authorized for listing on the NYSE under the symbol “RDC,” which is the same symbol under which shares of common stock of Rowan Delaware are currently listed, the market prices, trading volume and volatility of the ADS could be different from those of the shares of common stock of Rowan Delaware.

The value of ADS that you may be entitled to receive in the merger depends on the market price of the shares of common stock of Rowan Delaware before the merger and of the ADS at the effective time of the merger.

The number of ADS that you will be entitled to receive in the merger in exchange for the shares of common stock of Rowan Delaware you own is fixed at one ADS per one share of common stock of Rowan Delaware. Because the market price of the shares of common stock of Rowan Delaware will fluctuate from the date hereof until the effective time of the merger, the value at the time of the completion of the merger of the ADS that you receive will depend on the market price of the shares of common stock of Rowan Delaware at that time. There can be no assurance as to the market value of the shares of common stock of Rowan Delaware at the effective time of the merger. Therefore, there can be no assurance as to the market value of any ADS that you receive.

We expect to incur transaction costs in connection with the completion of the restructuring, some of which will be incurred whether or not the restructuring is completed.

We have begun to incur and expect to incur in 2011 and 2012 approximately US$9 million in transaction costs in connection with the restructuring. The substantial majority of these costs will be incurred regardless of whether the restructuring is completed and prior to your vote on the proposals.

In connection with the completion of the restructuring, we have evaluated the ability to realize or utilize our deferred tax assets related to U.S. operations under the new Rowan UK corporate structure. Based on information currently available, we expect to be able to fully utilize our deferred tax assets under the new Rowan UK corporate structure.

As a result of increased shareholder approval requirements, we may have less flexibility as a U.K. public limited company than as a Delaware corporation with respect to certain aspects of capital management.

Under Delaware law, our directors may issue, without further stockholder approval, any shares authorized in our certificate of incorporation that are not already issued or reserved. Delaware law also provides substantial flexibility in establishing the terms of preferred shares. However, English law provides that a board of directors may generally only allot shares with the prior authorization of shareholders, such authorization being up to the aggregate nominal amount of shares and for a maximum period of five years, each as specified in the articles of association or relevant shareholder resolution. This authorization would need to be renewed by Rowan UK’s shareholders upon or before its expiration (i.e., at least every five years). We anticipate that an ordinary resolution will be adopted prior to the effective time of the merger to authorize the allotment of additional shares, and renewal of such authorization for additional five year terms may be sought more frequently. See “Description of Class A Ordinary Shares of Rowan UK — Preemptive Rights and New Issues of Shares.”

English law also generally provides shareholders with preemptive rights when new shares are issued for cash; however, it is possible for the articles of association, or shareholders in general meeting, to exclude preemptive rights. Such an exclusion of preemptive rights may be for a maximum period of up to five years from the date of adoption of the articles of association, if the exclusion is contained in the articles of association, or from the date of the shareholder resolution, if the exclusion is by shareholder resolution. In either case, this exclusion would need to be renewed upon or before its expiration (i.e., at least every five years). We anticipate

 

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that a special resolution will be adopted to exclude preemptive rights prior to the effective time of the merger, and renewal of such exclusion for additional five year terms may be sought more frequently. See “Description of Class A Ordinary Shares of Rowan UK — Preemptive Rights and New Issues of Shares.”

English law also generally prohibits a company from repurchasing its own shares by way of “off market purchases” without the prior approval of shareholders by special resolution (i.e., 75 percent of votes cast). Such approval lasts for a maximum period of up to five years. English law prohibits Rowan UK from conducting “on market purchases” as its shares will not be traded on a recognized investment exchange in the U.K. We anticipate that a special resolution will be adopted to permit “off market purchases” prior to the effective time of the merger. See “Description of Class A Ordinary Shares of Rowan UK — Alteration of Share Capital/Repurchase of Shares.” This special resolution will need to be renewed upon expiration (i.e., at least every five years) but may be sought more frequently for additional five year terms.

We cannot assure you that situations will not arise where such shareholder approval requirements for any of these actions would deprive our shareholders of substantial capital management benefits.

Our ability to declare dividends and repurchase shares will be more limited following the merger.

Under English law, with limited exceptions, Rowan UK will only be able to declare dividends, make distributions or repurchase shares out of distributable profits. Under English law, “distributable profits” are a company’s accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made, calculated on a standalone basis. Immediately after the merger, Rowan UK may not have distributable profits. Unless we were to cause a distribution to be made to Rowan UK and pay the associated withholding taxes or otherwise create “distributable profits,” Rowan UK would not initially have distributable profits sufficient to fully implement our previously disclosed Board authorization to repurchase up to US$150 million of our shares.

The restructuring will result in additional ongoing costs to us.

The completion of the restructuring will result in an increase in some of our ongoing expenses and require us to incur some new expenses. Some costs, including those related to holding worldwide operational management meetings and holding board and shareholder meetings in the U.K., are expected to be higher than would be the case if we did not expand our presence in the U.K. We also expect to incur new expenses, including professional fees, to comply with U.K. corporate and tax laws.

Negative publicity resulting from the proposed merger could adversely affect our business and our stock price.

Foreign reincorporations like the proposed merger that have been undertaken by other companies have generated significant press coverage, much of which has been negative. Negative publicity generated by the proposed merger could cause some of our customers or suppliers to be more reluctant to do business with us. This could have an adverse impact on our business. Negative publicity could also cause some of our stockholders to sell our stock or decrease the demand for new investors to purchase our stock, which could have an adverse impact on our stock price.

 

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PROPOSAL 1 — APPROVAL OF THE ADOPTION OF THE MERGER AGREEMENT

The following includes a brief summary of the material provisions of the merger agreement, a copy of which is attached as Annex A and incorporated by reference into this proxy statement/prospectus. We encourage you to read the merger agreement in its entirety for a more complete description of the merger. In the event of any discrepancy between the terms of the merger agreement and the following summary, the merger agreement will control.

Introduction

You are being asked to adopt a merger agreement at the special meeting. As a result of the merger, you will have the right to receive a number of ADS equal to the number of shares of common stock of Rowan Delaware that you owned immediately prior to the merger. Upon completion of the merger, our business and operations will continue in substantially the same manner except that Rowan UK will be the parent company of the Rowan group of companies and you will own ADS representing shares in an English company instead of stock of a Delaware corporation. Rowan UK will be managed by the board of directors and executive officers that manage Rowan Delaware immediately prior to the merger except that, as previously announced as to the reduction in the size of the Board, two directors of Rowan Delaware intend to retire immediately before the merger. Additionally, the consolidated business, assets and operations of Rowan UK will be the same as those of Rowan Delaware immediately prior to the merger.

Under the merger agreement, Rowan Mergeco, which will hold ADS of Rowan UK, will merge with and into Rowan Delaware, with Rowan Delaware surviving the merger as an indirect, wholly owned subsidiary of Rowan UK. If the merger agreement is adopted by the stockholders, we anticipate that the merger will become effective shortly after such approval. We currently anticipate that the merger will become effective on or about April 18, 2012, although the merger may be postponed or abandoned by our Board at any time, including after stockholder approval.

The Parties to the Merger

The parties to the merger agreement described in this proxy statement/prospectus are related Rowan entities — Rowan Delaware and Rowan Mergeco.

Rowan Delaware is a major provider of global contract drilling services. We provide contract drilling services utilizing a fleet of 31 self-elevating mobile offshore drilling platforms (“jack-up rigs”). Our primary focus is on high-specification and premium jack-up rigs, which our customers use for offshore exploratory and development drilling and, in certain areas, well workover operations. We also have three new ultra-deepwater drillships under construction that will be added to our fleet in 2013 and 2014. Organized in 1947 as a Delaware corporation under the name Rowan Drilling Company, Inc., Rowan is a successor to a contract drilling business conducted since 1923.

Rowan Mergeco is a newly formed Delaware limited liability company and a subsidiary of Rowan Delaware. Prior to the merger, Rowan Mergeco will become an indirect, wholly owned subsidiary of Rowan UK. Rowan Mergeco does not have a significant amount of assets or liabilities and has not engaged in any business since its formation other than activities associated with its anticipated participation in the merger.

The principal executive offices of Rowan Delaware and Rowan Mergeco in the U.S. are currently located at 2800 Post Oak Boulevard, Suite 5450, Houston, Texas 77056, and the telephone number of each company is (713) 621-7800.

Rowan UK is a newly formed English private limited company named “Rowan Companies Limited” and a subsidiary of Rowan Delaware. Prior to the merger, Rowan UK will re-register as an English public limited

 

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company named “Rowan Companies plc” or a similar name. Rowan UK does not have a significant amount of assets or liabilities and has not engaged in any business since its formation other than activities associated with its anticipated participation in the restructuring.

The principal executive offices of Rowan UK are currently located at Rowan House, Peterseat Drive, Altens Industrial Estate, Aberdeen, AB12 3HT, Scotland, and the telephone number is +44 1224 216550.

Background and Reasons for the Merger

Our strategy in recent years has been to focus on our core offshore drilling business and to grow our fleet of high specification rigs. Accordingly, we determined to sell our manufacturing and land drilling operations when market conditions favored such sales and did so in 2011, selling our manufacturing subsidiary, LeTourneau Technologies, Inc., for approximately US$1.1 billion in cash, and our land drilling business for approximately US$535 million in cash. We are using proceeds from these sales to fund the final phases of our jack-up newbuilding program and to expand into the ultra-deepwater drilling segment through our recently announced contracts for construction of three ultra-deepwater drillships.

Another important part of our strategy has been to evolve into a more geographically diversified company. We believe that changing the place of incorporation of our parent company from Delaware to the U.K. will help achieve that goal. We believe this restructuring is advisable and in the best interests of the stockholders because it will establish our parent company in a country where we already have substantial operations, is centrally located to our customers and operations, and has a stable and developed legal regime, well established standards of corporate governance and substantial rights for our stockholders. In addition, we will be able to take advantage of the U.K.’s favorable tax regime. We believe this will improve our ability to compete globally, achieve higher returns and provide us with greater resources to reinvest in growing our company.

The change to a non-U.S. place of incorporation is supported by the fact that the offshore drilling industry is an increasingly global business and as a consequence our business is primarily conducted outside of the U.S. We expect that trend to continue. Specifically:

 

   

We conduct a significant part of our business operations in offshore areas outside of the U.S., such as the U.K., Norway, the Middle East, Trinidad and Southeast Asia. At February 23, 2012, 21 of our 31 offshore drilling units (i.e., 68 percent) were located outside of the U.S. and its territorial waters. We expect the number of drilling units located outside of the U.S. to increase to 23 units (i.e., 74 percent) by the end of 2012. By contrast, in early 2005, approximately 8 percent of our offshore drilling units were located outside of the U.S. Our current backlog of drilling commitments exceeds US$3 billion, 96 percent of which is related to work outside of the U.S.

 

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We anticipate that we will continue to derive an increasing percentage of our future revenues from non-U.S. operations, in general, and non-U.S. offshore drilling operations, in particular, as shown in the following chart:

 

LOGO

 

   

At December 31, 2011, we had approximately 2,700 employees in 13 countries. Approximately 49 percent of our employees are neither U.S. citizens nor U.S. tax residents and 67 percent of our employees are assigned to non-U.S. work locations, including approximately 750 employees working in the North Sea region.

 

   

We maintain many offices and other facilities outside of the U.S., which are essential to our operations, including in Aberdeen, Scotland; Doha, Qatar; Dubai, U.A.E.; Stavanger, Norway; Bahrain; Al Khobbar and Dammam, Saudi Arabia; Chaguaramas, Trinidad; Cairo, Egypt; Kuala Lumpur, Malaysia and Ho Chi Minh City, Vietnam. In the U.S., we maintain facilities in Houston and Sabine Pass, Texas.

We expect the change of our corporate domicile to the U.K. will result in the following anticipated benefits:

Improved Global Location.

 

   

We believe this merger will allow our management to more effectively implement our global strategy and improve access to key customers in the U.K., Europe and Egypt, which collectively comprise 59 percent of our current contract backlog. Our operational management is significant in the U.K. today because the Aberdeen office manages operations that constitute 36 percent of our anticipated revenues for 2012 coming from six of our seven largest and highest day rate jack-ups that are working in the North Sea. The U.K. is a significant operational area for us and centrally located between our second and third largest regions, the Middle East and the Gulf of Mexico. This restructuring will better facilitate our global operations management and communications by reducing travel and time zone differences for our regional managers, and allowing our U.K. operations to play more of a support role worldwide as we increase our international presence. We expect that the merger will ultimately result in operational and administrative efficiencies over the long term and enhance our ability to further expand our growing offshore presence.

 

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We plan to move certain senior management and operations meetings from the U.S. to the U.K. Following the merger, we intend to hold quarterly board meetings in the U.K., as well as four to six senior management meetings each year in the U.K. We believe this will facilitate our emphasis on North Sea, Middle East and Southeast Asia operations. Also, we plan to hold quarterly management meetings of our Chief Operating Officer, Operations Vice Presidents, General Managers and Country managers. Annual meetings of our senior operations managers also will be held in the U.K. The North Sea currently holds our largest concentration of rig managers and offshore installation managers and is central to our worldwide operations; therefore, holding meetings in this location will minimize disruption in our business due to travel from regions worldwide. The new location of management meetings will also facilitate senior management visits to our operations and to current and potential customers in our non-U.S. areas of operation.

 

   

The U.K. is centrally located and will enhance our ability to further expand in the North Sea and other markets by continuing to build an efficient shore base from which to travel to and communicate with our rigs and meet with key customers in those important markets, and provide a more favorable structure for acquiring and partnering with other companies in our industry. We currently have a regional General Manager, Operations Manager and Marketing Vice President based in and operating out of the U.K., as well as, departmental managers for Human Resources, Engineering and Finance.

 

   

The London market has historically been the center for global insurance markets, and we have developed strong relationships with those insurance providers over the years. Currently, 87 percent of our fleet values are insured in the London market. With the globalization of our existing rig fleet and our US$2 billion investment in new ultra-deepwater rig construction, our risk management profile and insurance needs have become increasingly complex. We believe that it will be easier for us to maintain our relationships with key insurance providers with an increased presence in the U.K.

Possible Advantageous Tax Regime.

 

   

The U.K. has recently taken steps to decrease uncertainty about its international tax regime by proposing the liberalization of certain of its international tax provisions to better harmonize them with the foreign dividend exemption system implemented in the U.K. in 2009. In addition, the U.K. has a more extensive tax treaty network than the U.S. that should enable us to maintain a competitive worldwide effective corporate tax rate. We believe that the merger will improve our global tax position over the long term and substantially lower our risk related to possible changes in tax and other laws, possible changes in U.S. tax treaties and disputes with tax and other authorities in the jurisdictions where we operate or are incorporated or resident. As such, we believe the merger will provide greater predictability and allow us, over the long term, to remain competitive with the effective tax rates of our global competitors, most of which are domiciled outside the U.S.

 

   

Further, the U.K. currently has lower corporate tax rates than the U.S. and generally has a more favorable tax regime with respect to non-U.K. earnings of foreign subsidiaries. In addition, under rules enacted in 2011, and based on certain confirmations given in writing by HMRC, a temporary exemption from certain aspects of the U.K. corporation tax regime applicable to certain non-U.K. subsidiaries of Rowan U.K. is expected to apply to Rowan U.K., subject to certain limited conditions, until December 31, 2014. We expect that the U.K. corporation tax system will continue to be more favorable than the U.S. tax system, and we, therefore, anticipate that the merger may enhance our ability to realize significant tax savings in the future. However, we cannot give any assurance as to what our tax savings will be after the merger, if any. After the merger, our tax rate will depend on, among other things, the locations where we will be conducting drilling services, the relative mix of profitability from our operations worldwide and our ability to react to any changes in tax laws, treaties and policies and the interpretation of these laws, treaties and policies in the jurisdictions where we operate or are incorporated or are resident. Our actual effective corporate tax rate may vary materially from our expectations.

 

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In contrast, U.S. legislative proposals to revise the Code, in general, and to tighten the international tax provisions of the Code, in particular, have been introduced by the current U.S. administration and in the U.S. Congress. Many of these proposals, if enacted, would have an adverse effect on our worldwide effective corporate tax rate. Other proposed legislation has advanced the possibility that the U.S. may consider replacing its current foreign tax credit system with a territorial or modified territorial tax regime as part of fundamental tax reform to address the growing U.S. debt crisis. However, due to Congressional deadlock on many of these tax proposals, there is substantial uncertainty regarding whether any of such proposals, or other proposals, will be enacted as part of fundamental U.S. tax reform in 2012 or later years. Without the merger, this uncertainty would make it more difficult for us to predict our worldwide effective corporate tax rate for future years and the impact of U.S. taxation on our future cash flows.

Stable Legal System and Established Corporate Governance.

 

   

The U.K. is a major financial center known for its stability and financial sophistication. We do not currently have a substantial number of stockholders resident in the U.K. We believe that it will be easier for us to develop relations with potential U.K. and European institutional investors and increase that investor base as an English company.

 

   

The U.K. has a stable and well-developed legal system that we believe encourages high standards of corporate governance and provides shareholders with substantial rights. Generally, the rights of a shareholder of an English company are substantially similar to, and in some cases more favorable to shareholders than, the rights of a stockholder of a Delaware company, although the exercise of certain rights may require you to surrender your ADS and withdraw the underlying Class A Ordinary Shares. Further, the U.K. is an English-speaking common law jurisdiction, which we believe makes its legal system less prescriptive and more flexible than those of civil law jurisdictions and also more familiar to Rowan Delaware and its stockholders.

In approving the merger, our Board was cognizant of and considered a variety of negative or potentially negative factors, including:

 

   

lack of availability of intended tax benefits because of changes in operations, laws, etc.;

 

   

potential adverse tax consequences to stockholders;

 

   

the transaction costs related to the merger and ongoing administrative costs related to the restructuring;

 

   

potential adverse publicity;

 

   

the possibility of an IRS challenge to the intended U.S. federal corporate income tax consequences of the merger;

 

   

the possibility that Rowan UK could be considered a PFIC following the merger;

 

   

changes in the rights of ADS holders compared to stockholders of a Delaware company; and

 

   

potential retroactive changes in U.S. federal tax laws.

In the course of its review of the merger and its attendant risks, our Board engaged in discussions with management and external advisors to evaluate potentially negative consequences of the merger. After completing its review of the expected benefits and potential risks, the Board unanimously determined that the merger was in the best interests of Rowan Delaware and its stockholders as the expected benefits of the merger outweighed the risks thereof. Please see “Forward-Looking Statements” and “Risk Factors” for further discussion of the potentially negative factors discussed above and for a discussion of factors that could prevent us from achieving the benefits described above that we anticipate from completion of the merger.

 

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The Merger

The steps that have been taken to date, and that will be taken, to complete the merger are:

 

   

Rowan Delaware formed Rowan UK as an English private limited company, with Rowan Delaware as its sole shareholder, holding in aggregate 50,000 Class B Ordinary Shares;

 

   

Rowan Delaware entered into a subscription agreement with Rowan UK pursuant to which Rowan Delaware subscribed for 150 million Class A Ordinary Shares, but directed that those Class A Ordinary Shares be issued directly to and deposited with Citibank or its nominee or agent as registered holder. Rowan UK and Citibank entered into a deposit agreement providing for the issuance to Rowan Delaware of ADS representing the Class A Ordinary Shares of Rowan UK;

 

   

an intermediate holding company subsidiary was formed, as well as Rowan Mergeco; and ADS of Rowan UK were contributed to Rowan Mergeco;

 

   

conditional upon stockholder approval of the merger agreement, Rowan Delaware will cause the restructuring to occur, which includes a series of transactions to cause Rowan Mergeco and the intermediate holding company to become subsidiaries of Rowan UK;

 

   

prior to the time the stockholders approve the adoption of the merger agreement, Rowan UK will re-register as a public limited company and change its name to “Rowan Companies plc” or a similar name;

 

   

a special resolution of Rowan UK will be passed to alter the rights of the holders of the Class A Ordinary Shares to have the rights summarized in this proxy statement/prospectus, conditional upon the merger becoming unconditional in all respects;

 

   

when the merger becomes effective,

 

   

each share of common stock of Rowan Delaware (other than treasury shares (other than any shares held for the benefit of any employee or director benefit plan)) will be converted by operation of law into and become the right to receive one ADS. This will result in each holder of shares of common stock of Rowan Delaware receiving one ADS for each share of common stock of Rowan Delaware held immediately prior to the merger. The remaining ADS will be held by Rowan Delaware as the surviving corporation or its designee after the merger; and

 

   

the issued membership interests of Rowan Mergeco will be converted by operation of law into one share of common stock of Rowan Delaware (as the surviving corporation), which will be held by an indirect, wholly owned subsidiary of Rowan UK;

 

   

all shares of common stock of Rowan Delaware held in treasury (other than any shares held for the benefit of any employee or director benefit plan) immediately prior to the merger will automatically be cancelled and retired and will cease to exist, without consideration being delivered for such cancellation, and all Class B Ordinary Shares of Rowan UK will remain in issue, but will have no voting rights or rights to dividends or distributions to the extent that they are held by Rowan Delaware;

 

   

each outstanding option, stock appreciation right, share of restricted stock, restricted stock unit and other equity-based award issued under our equity incentive plans for the purchase or receipt of, or benefits or amounts based on (or by reference to), shares of common stock of Rowan Delaware will represent the right to purchase or receive, or receive benefits or amounts based on (or by reference to), as applicable, the same number of ADS representing Class A Ordinary Shares of Rowan UK on the same terms; and

 

   

Rowan Mergeco, or Rowan Delaware as the surviving corporation, will deliver the ADS to be received by the Rowan Delaware stockholders to the exchange agent for exchange, and the remaining ADS will be retained by Rowan Delaware as the surviving corporation or its designee after the merger.

 

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The merger agreement may be amended, modified or supplemented at any time by the parties thereto before or after it is adopted by the stockholders of Rowan Delaware. However, after adoption by the stockholders, no amendment, modification or supplement may be made or effected that requires further approval by Rowan Delaware stockholders without obtaining that approval. Further, our Board may abandon the merger at any time, including after stockholder approval.

Ownership in Rowan UK; Conversion of Shares

The conversion of shares of common stock of Rowan Delaware into the right to receive the merger consideration in the form of ADS on a one-for-one basis will occur automatically at the effective time of the merger. If you hold stock certificates representing shares of common stock of Rowan Delaware, soon after the effective time of the merger you will be sent a letter of transmittal that is to be used to surrender your Rowan Delaware stock certificates and to request that ADS be issued to you. The letter of transmittal will contain instructions explaining the procedure for surrendering Rowan Delaware stock certificates and receiving ADS. YOU SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD OR VOTING INSTRUCTION CARD. If a certificate for shares of common stock of Rowan Delaware has been lost, stolen or destroyed, the exchange agent will issue the merger consideration properly deliverable under the merger agreement upon compliance by the applicable stockholder with the replacement requirements established by the exchange agent.

As further set forth in the letter of transmittal, the exchange agent will, as soon as reasonably practicable after the effective time of the merger, exchange certificates representing shares of common stock of Rowan Delaware for the merger consideration in the form of ADS. Class A Ordinary Shares have been delivered to the custodian for the ADS and, in exchange, the depositary has issued to Rowan Delaware the ADS that will be delivered to the stockholders of Rowan Delaware after the effective time of the merger. The ADS will be transferred to Rowan Mergeco prior to the effective time of the merger and, following the effective time of the merger, will be delivered to the exchange agent for delivery to Rowan Delaware stockholders upon surrender of the certificates representing shares of common stock of Rowan Delaware.

If you are currently a beneficial holder, your ownership of ADS will be recorded in book-entry form by your broker with no need for any additional action on your part.

If you hold your shares indirectly in the Rowan Companies, Inc. savings plan, your indirect ownership of ADS will be recorded in book-entry form by the trustee with no need for any additional action on your part.

Dividends and Distributions; Withholding

Rowan Delaware last paid a cash dividend in November 2008, and there are no current plans for dividend payments. Future dividends, if any, will only be paid at the discretion of the Board. However, until Rowan Delaware stock certificates or book-entry shares are surrendered for exchange, any dividends or other distributions of Rowan UK declared after the effective time of the merger with respect to ADS will accrue but will not be paid. Rowan UK will pay to former Rowan Delaware stockholders any unpaid dividends or other distributions, without interest, only after they have duly surrendered their Rowan Delaware stock certificates or book-entry shares. After the effective time of the merger, there will be no transfers on the stock transfer books of Rowan Delaware of any shares of common stock of Rowan Delaware. If stock certificates representing shares of common stock of Rowan Delaware are presented for transfer after the completion of the merger, they will be cancelled and exchanged for the merger consideration into which the shares of common stock of Rowan Delaware represented by that certificate have been converted.

The exchange agent will be entitled to deduct and withhold from the merger consideration payable to any Rowan Delaware stockholder the amounts it is required to deduct and withhold under the Code or any provision of any state, local or foreign tax law. If the exchange agent withholds any amounts, these amounts will be treated for all purposes of the merger as having been paid to the stockholders from whom they were withheld.

 

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Possible Postponement or Abandonment

Pursuant to the merger agreement, the Board may exercise its discretion to postpone the merger or to terminate the merger agreement, and therefore abandon the merger, at any time, including after stockholder approval. Please see “Risk Factors — Our Board may choose to postpone or abandon the merger at any time.”

Credit Agreements

The credit agreement governing our US$600 million revolving credit facility requires that we obtain consent for the merger from our lenders under the credit agreement. In addition, those certain other credit arrangements to which the Company is a party may require that we obtain consent for the merger from our lenders under such arrangements. As set forth in the merger agreement, it is a condition to the consummation of the merger that we either obtain consents or waivers from our lenders or otherwise amend certain provisions of our credit arrangements, as applicable. We are seeking the necessary consents, waivers or amendments from our lenders. However, if we are unsuccessful we may not be able to complete the restructuring or suffer adverse consequences.

Additional Agreements

The “Comparison of Rights of Stockholders/Shareholders — Indemnification of Directors and Officers” section of this proxy statement/prospectus describes the English law relating to director and officer liability and indemnification. We expect to enter into deeds of indemnity with directors, executive officers and certain other officers and employees (which may include directors, officers and employees of subsidiaries and other affiliates). These deeds of indemnity will require that Rowan UK indemnify and hold harmless such persons, to the fullest extent permitted by applicable law, against all losses suffered or incurred by them which arise in connection with their appointment as a director or officer, as applicable, an act done in connection with their performance of their functions as a director or officer or an official investigation ordered into the affairs of the company of which they are serving as a director or officer at the request of the indemnifying company. The current indemnity agreements between Rowan Delaware and its officers and directors and Rowan Delaware’s bylaws currently provide similar indemnification rights to such persons and will remain in place. However, the Companies Act prohibits an English company from indemnifying directors and certain officers in particular circumstances, which are set out in the relevant deeds of indemnity and generally summarized in the “Comparison of Rights of Stockholders/Shareholders — Indemnification of Directors and Officers.”

The merger may constitute a change in control for purposes of Rowan Delaware’s equity incentive plans; however, we do not intend to accelerate vesting or exercisability of, or waive any restrictions or conditions on, any outstanding equity award in connection with the restructuring. Each of our current executive officers has previously entered into a change in control agreement, which will continue after the merger and reflect that Rowan UK is now the parent company. The merger is not intended to constitute a change in control for purposes of these change in control agreements. We have or will, to the extent permitted, take any necessary or advisable steps to ensure that the equity incentive plans, change in control agreements and certain other plans and agreements provide that any outstanding equity award is converted into rights to (or benefits or amounts based on or by reference to) ADS on an equivalent one-share to one-ADS basis as of the effective time of the merger. Please see below “— Stock Compensation and Benefit Plans and Programs.”

Conditions to Completion of the Merger

Unless, among other things, the following conditions or requirements are satisfied or, if allowed by law or the merger agreement, waived, the merger and the restructuring will not be completed:

 

   

upon the SEC’s declaration of effectiveness of the registration statement on Form S-4 with respect to the merger, Rowan Delaware will have transferred all ADRs to Rowan Mergeco;

 

   

the merger agreement will have been adopted by the requisite vote of stockholders of Rowan Delaware;

 

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conditional upon stockholder approval of the merger agreement and the transfer of all ADRs to Rowan Mergeco, the restructuring will have been completed such that Rowan Mergeco and the intermediate holding company will have become subsidiaries of Rowan UK;

 

   

Rowan UK will have re-registered as a public limited company;

 

   

a special resolution will have been passed to alter the rights of the holders of the Class A Ordinary Shares to have the same rights as holders of Class B Ordinary Shares, conditional upon the merger becoming unconditional;

 

   

the ADS to be issued pursuant to the merger will have been authorized for listing on the NYSE, subject to official notice of issuance and satisfaction of other standard conditions;

 

   

Baker & McKenzie LLP, legal and tax counsel to Rowan Delaware and Rowan UK, and Ernst & Young LLP, tax advisor to Rowan Delaware and Rowan UK, will each have delivered a tax opinion, as of the effective date of the merger, addressing the U.S. federal income tax consequences of the merger to Rowan UK under Section 7874 of the Code in form and substance acceptable to Rowan UK;

 

   

Rowan Delaware will have received lender consents or waivers under, and/or amended, its credit arrangements, as applicable;

 

   

no decree, order or injunction will have been in effect with respect to the SEC registration statement of which this proxy statement/prospectus is a part;

 

   

the registration statement of which this proxy statement/prospectus is a part shall have become effective under the Securities Act, and no stop order with respect thereto shall be in effect;

 

   

a registration statement on Form F-6 filed with the SEC in connection with the issuance of the ADS to be delivered pursuant to the merger will have become effective under the Securities Act, and no stop order with respect thereto shall be in effect;

 

   

no law or order prohibiting or pending law suit seeking to prohibit the merger will have been issued or filed by any competent U.S., European Union or U.K. governmental entity, subject to certain exceptions described in this proxy statement/prospectus; and

 

   

all material consents and authorizations of, filings or registrations with, and notices to, any governmental or regulatory authority required of Rowan Delaware, Rowan UK or their subsidiaries to consummate the merger will have been obtained or made.

Our Board does not intend to waive (where capable of waiver) any of these conditions or requirements unless it determines that the merger is in the best interests of Rowan Delaware and our stockholders, despite the condition(s) not being satisfied in whole or in part. Additionally, our Board reserves the right to postpone or abandon the merger at any time, including after stockholder approval, for the reasons described under “Risk Factors — Our Board may choose to postpone or abandon the merger at any time.”

Stock Compensation and Benefit Plans and Programs

We have a variety of equity incentive plans, compensation plans, and other plans, agreements, awards and arrangements outstanding that provide for stock options, stock appreciation rights, restricted stock, restricted stock units or other rights to purchase, acquire or receive shares of common stock of Rowan Delaware (or the right to receive benefits or amounts by reference to those shares). We refer to these plans, agreements, awards and arrangements as our equity incentive plans. As part of the merger, we expect that Rowan UK will assume and adopt the 2009 Incentive Plan (and such other equity incentive plans as we determine, if any), as of the effective time of the merger. We currently expect that Rowan Delaware will remain the plan sponsor of all equity incentive plans other than the 2009 Incentive Plan and of all equity incentive awards outstanding at the effective time of the merger (except for any awards we determine should be assumed by Rowan UK for legal or administrative reasons). The equity incentive plans and certain other plans and agreements have been and/or will

 

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be amended or modified, to the extent required, (i) to reflect the issuance of rights over ADS (rather than rights over shares of common stock of Rowan Delaware), (ii) to comply, or facilitate compliance, with applicable English or U.S. corporate or tax law requirements, and (iii) in the case of the 2009 Incentive Plan (and other equity incentive plans, if applicable), to facilitate the assumption and adoption by Rowan UK and the various rights, duties or obligations thereunder. Stockholder approval of the adoption of the merger agreement will also constitute stockholder approval of the amendments to the equity incentive plans and the adoption and assumption of the 2009 Incentive Plan (and other equity incentive plans, if applicable) by Rowan UK as contemplated by this proxy statement/prospectus and the merger agreement. After the effective time of the merger, equity incentive plans that provide benefits to employees and directors of Rowan Delaware and its subsidiaries will, if applicable, continue to provide benefits to such employees or directors consistent with the current manner, subject to the limitations set forth in the relevant plan, as such plan may be amended from time to time. To the extent that awards of stock appreciation rights, restricted stock, restricted stock units or similar restricted share rights are granted following the effective time of the merger, the holder may be obligated to pay the nominal or par value to receive the ADS due to English corporate law requirements unless such ADS were previously issued and the nominal value of the shares underlying such ADS were previously paid. We anticipate that sufficient ADS have been issued and contributed to Rowan Mergeco such that, following the merger, existing holders of equity awards will not be required to pay the nominal or par value to receive the ADS upon exercise or settlement of the award, or that other arrangements can be put in place to facilitate payment of the nominal value if required.

At the effective time of the merger, all outstanding options to purchase shares of common stock of Rowan Delaware granted or issued prior to the effective time of the merger, all outstanding stock appreciation rights with respect to shares of common stock of Rowan Delaware and all outstanding shares of restricted stock or restricted stock units of Rowan Delaware and other equity awards granted under our equity incentive plans, will entitle the holder to purchase or receive, or receive benefits or amounts based on (or by reference to), as applicable, an equal number of ADS. All of such stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based awards will be subject to the same terms and conditions as were applicable to such awards granted or issued by Rowan Delaware immediately prior to the effective time of the merger (other than as necessary or advisable to reflect the conversion of the underlying shares of common stock of Rowan Delaware and/or to comply or facilitate compliance with applicable English or U.S. corporate or tax law requirements), including the same exercise price, in the case of stock options and stock appreciation rights.

Holders of outstanding nonqualified options, stock appreciation rights, awards of restricted stock, restricted stock units or other equity-based awards, and, potentially, beneficial owners of shares of common stock of Rowan Delaware acquired under certain other plans, other than U.S. taxpayers who perform all of their services within the U.S., may be subject to tax as a result of the conversion of the underlying shares of common stock of Rowan Delaware to ADS, depending on the country where the holders are citizens or tax residents or the country where they resided during the life of such equity awards of Rowan Delaware. Holders of restricted stock subject to Code Section 83(b) elections should refer to the discussion below of Material Tax Consequences to Stockholders. Tax withholding and/or reporting may be required by Rowan UK or one of its affiliates and/or the holder of the applicable equity award, and certain employer social insurance contributions or other taxes may be due as a result of the conversion of the equity awards from awards related to shares of common stock of Rowan Delaware to awards related to Rowan UK ADS. Depending on the country where the holders are citizens or residents or the country where they resided during the life of the Rowan Delaware awards, it is also possible that the conversion of equity awards will trigger certain regulatory filings or notices to employees.

Effective Time of the Merger

If approved by our stockholders, we anticipate that the merger will become effective on or about April 18, 2012, although the merger may be postponed or abandoned by our Board at any time, including after stockholder approval.

 

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Management of Rowan UK

Immediately prior to the effective time of the merger, all of the directors and all of the executive officers of Rowan Delaware will become the directors and executive officers of Rowan UK, except that, as previously announced as to the reduction in the size of the Board, two directors of Rowan Delaware intend to retire immediately before the merger. Following the merger, the continuing directors within each class of directors as currently in effect with respect to Rowan Delaware will be directors of the corresponding class of directors with respect to Rowan UK. If the merger is completed, the members of the Rowan UK Board will serve until the earlier of the next meeting of shareholders at which an election of their respective class of directors is required or until their successors are elected, and the executive officers will serve until their successors are elected or earlier death, disability or retirement. If the declassification proposal is approved by our stockholders, the directors elected at the 2013 annual general meeting (and each annual general meeting thereafter) will be elected for one-year terms, and beginning with the 2015 annual general meeting, the entire Board will be elected annually.

Regulatory Approvals

The only governmental or regulatory approvals or actions that are required to complete the merger are compliance with U.S. federal and state securities laws, the NYSE rules and regulations, U.K. securities laws and Delaware and English company law (including the filing with the Secretary of State of the State of Delaware of a certificate of merger).

Rights of Dissenting Stockholders

Under the DGCL, you will not have appraisal rights in connection with the merger because, among other reasons, the ADS you have a right to receive in the merger will be listed on the NYSE.

Comparison of Rights of Holders of Shares of Common Stock of Rowan Delaware with Holders of ADS representing Rowan UK Shares

There are numerous differences between the rights of a stockholder of Rowan Delaware, a Delaware corporation, and the rights of a holder of ADS representing Class A Ordinary Shares of Rowan UK, a company incorporated under English law. The characteristics of and the differences between shares of common stock of Rowan Delaware and the Class A Ordinary Shares and ADS representing Class A Ordinary Shares are summarized under “Description of American Depositary Shares of Rowan UK” and “Description of the Class A Ordinary Shares of Rowan UK” and “Comparison of Rights of Stockholders/Shareholders.”

Stock Exchange Listing

Shares of common stock of Rowan Delaware are currently listed on the NYSE under the symbol “RDC.” There is currently no established public trading market for the Class A Ordinary Shares of Rowan UK or ADS representing such shares. However, it is a condition to the completion of the merger that the ADS will be authorized for listing on the NYSE, subject to official notice of issuance and satisfaction of other standard conditions. As such, we anticipate that, as of the effective time of the merger, the ADS will be authorized for listing on the NYSE and we expect such ADS will be listed on the NYSE under the symbol “RDC.”

Dividends and Share Repurchases

The Company last paid a cash dividend in November 2008, and there are no current plans for dividend payments to our shareholders. Notwithstanding the foregoing, the declaration and payment of all future dividends and any share repurchases will remain subject to the discretion of the Rowan UK Board and the limitations set forth in the Companies Act, which generally provide that dividends, distributions and share repurchases may only be made out of distributable profits. “See Risk Factors — Our ability to declare dividends and repurchase shares will be more limited following the merger.”

 

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Accounting Treatment of the Merger

Historical cost basis accounting, rather than acquisition method accounting, will be applied to the merger. Given that, for accounting purposes, there will be no change in control and Rowan Delaware’s stockholders will be in the same economic position immediately before and after the restructuring, and because the restructuring will be accounted for as an internal reorganization of entities under common control, there will be no revaluation of Rowan Delaware’s assets and liabilities.

Effect of the Merger on Potential Future Status as a Foreign Private Issuer

We do not believe that, after the merger, Rowan UK will be classified as a “foreign private issuer” within the meaning of the rules promulgated under the Exchange Act. The definition of a “foreign private issuer” has two tests — one based on the percentage of shares held by U.S. residents and the other on its business contacts with the U.S. An organization incorporated under the laws of a foreign country will qualify as a foreign private issuer unless both tests in the definition are met as of the last business day of its most recently completed second fiscal quarter.

The shareholder test will be met if more than 50 percent of the outstanding voting securities of a non-U.S. domiciled organization are held by U.S. residents. Because we understand that more than 50 percent of our outstanding voting securities are held and will continue to be held upon completion of the merger by U.S. residents, we currently anticipate that Rowan UK will meet the shareholder test upon completion of the merger.

The business contacts test will be met if any of the following are true with respect to a non-U.S. domiciled organization: (i) the majority of its executive officers or directors are U.S. citizens or residents; (ii) 50 percent or more of its assets are located in the U.S.; or (iii) its business is administered principally in the U.S. We currently anticipate that Rowan UK will meet the business contacts test upon the completion of the merger.

In the foreseeable future, it is possible that more than 50 percent of our assets will be located outside of the U.S. However, that should not affect the foreign private issuer analysis set forth above since we expect that immediately following the merger more than 50 percent of the outstanding voting securities of Rowan UK will continue to be held by U.S. residents and, at a minimum, the majority of our executive officers and directors will be U.S. citizens. As a result, we would not qualify as a foreign private issuer.

However, Rowan UK could cease to satisfy either the shareholder test or the business contacts test at some time in the future and, as a result, could qualify for status as a foreign private issuer. If that occurs, Rowan UK would be exempt from certain requirements applicable to U.S. public companies, including, among others:

 

   

the rules requiring the filing of Quarterly Reports on Form 10-Q and Current Reports on Form 8-K with the SEC;

 

   

the SEC’s rules regulating proxy solicitations;

 

   

the provisions of Regulation FD;

 

   

the filing of reports of beneficial ownership under Section 16 of the Exchange Act (although beneficial ownership reports may be required under Section 13 of the Exchange Act); and

 

   

“short-swing” trading liability imposed on insiders who purchase and sell securities within a six-month period.

*    *    *

Recommendation and Required Vote

The affirmative vote of the holders of a majority of the outstanding shares of common stock of Rowan Delaware entitled to vote at the special meeting is required to approve the proposal to adopt the merger

 

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agreement. Our Board believes that the merger, to be effected by the merger agreement, is advisable and in the best interests of Rowan Delaware and our stockholders. ACCORDINGLY, OUR BOARD HAS UNANIMOUSLY APPROVED THE MERGER AND THE MERGER AGREEMENT. OUR BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ADOPTION OF THE MERGER AGREEMENT.

If the proposal to approve the adoption of the merger agreement is not approved, we will not present the other proposals for a vote at the special meeting.

 

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PROPOSAL 2 — APPROVAL OF MANDATORY OFFER PROVISIONS IN ROWAN UK’S ARTICLES OF ASSOCIATION

The following includes a brief summary of the material parts of the mandatory offer provisions in the form of the New Articles and which are proposed to be adopted immediately prior to the consummation of the merger, a copy of which is substantially in the form attached to this proxy statement/prospectus as Annex B and incorporated by reference into this proxy statement/prospectus. The mandatory offer provisions are indicated in the New Articles by the use of brackets and bold lettering. We encourage you to read the New Articles in their entirety. In the event of any discrepancy between the mandatory offer provisions in the New Articles and the following summary, the New Articles will control.

Non-Applicability of the U.K. Takeover Code

In the U.K., takeover offers and certain other transactions in respect of certain public companies are regulated by the U.K. City Code on Takeovers and Mergers, or “Takeover Code,” which is administered by the Takeover Panel. An English public limited company is potentially subject to the Takeover Code if, among other factors, its central place of management and control is within the U.K., the Channel Islands or the Isle of Man. The Takeover Panel will generally look to the residency of a company’s directors to determine where it is centrally managed and controlled. The Takeover Panel has confirmed that, based upon Rowan UK’s current and intended plans for its directors and management and for purposes of the Takeover Code, Rowan UK will be considered to have its place of central management and control outside the U.K., the Channel Islands or the Isle of Man. Therefore, the Takeover Code would not apply to Rowan UK. It is possible that in the future circumstances could change that may cause the Takeover Code to apply to Rowan UK.

Providing Shareholders with Certain Protections Similar to Those of the U.K. Takeover Code

Although Rowan UK will not be subject to the Takeover Code immediately following the redomestication, the Board recognizes the importance of the mandatory offer provisions and certain other Takeover Code protections afforded to shareholders of U.K. public companies that are mandatorily subject to the Takeover Code. The Board has recommended that the New Articles include some similar protections. These provisions are summarized below and seek to regulate certain acquisitions of interests in the shares of Rowan UK but do in some respects differ from the terms of the analogous protection under the Takeover Code. These provisions do not, however, provide all of the protections provided by the Takeover Code as the Board does not believe all provisions of the Takeover Code would be of benefit to the Rowan UK shareholders.

Under the proposed provisions, which are intended to be similar to Rule 9 of the Takeover Code (except as described below), a person must not:

 

  (i) whether by a series of transactions over a period of time or not, acquire an interest in shares which (taken together with shares in which persons determined by the Rowan UK Board to be acting in concert with him or her are interested) carry 30 percent or more of the voting rights of Rowan UK; or

 

  (ii) while he or she (together with persons determined by the Rowan UK Board to be acting in concert with him or her), is interested in shares which in aggregate carry not less than 30 percent but not more than 50 percent of the voting rights of Rowan UK, acquire, whether by himself or herself or with persons determined by the Rowan UK Board to be acting in concert with him or her, an interest in any other shares that (taken together with any interests in shares held by persons determined by the Rowan UK Board to be acting in concert with him or her), increases the percentage of shares carrying voting rights in which he or she is interested,

except, in either case:

 

  (1)

with the consent of the Rowan UK Board, pursuant to an offer recommended by the Rowan UK Board or with the prior approval of the shareholders of Rowan UK (other than: (a) the acquirer and persons acting in concert with him or her; or (b) persons from whom the acquirer (together

 

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  with persons determined by the Rowan UK Board to be acting in concert with him or her) has agreed to acquire shares or has otherwise obtained an irrevocable commitment in relation to the acquisition of shares by the acquirer or any persons determined by the Rowan UK Board to be acting in concert with him or her); or

 

  (2) where the acquisition is made in breach of either limit described in (i) or (ii) above as a result of a tender offer for all of the issued and outstanding shares of Rowan UK that is in cash (or accompanied by a cash alternative) and otherwise in accordance with the Takeover Code; or

 

  (3) where the acquisition is made pursuant to a single transaction which causes a breach of either limit described in (i) or (ii) above otherwise than as a result of a tender offer (for example, by an open market purchase) and the acquirer makes and implements a mandatory offer to all other shareholders of Rowan UK on the basis described below (provided that, subject to certain exceptions, no further acquisitions are made by the acquirer other than pursuant to such a mandatory offer).

Where a mandatory offer is required under the New Articles for the acquirer to avail itself of the exception in (3), such mandatory offer must be made and implemented in accordance with the rules applicable to mandatory offers under the Takeover Code (as if the Takeover Code applied to Rowan UK). In particular, it must be unconditional (other than as to acceptances), be in cash (or accompanied by a cash alternative) and be at the highest price paid by such person required to make the mandatory offer (or any other person acting in concert with such person) for any interest in shares in Rowan UK during the previous 12 months. Such a mandatory offer must be made within 7 days of breaching either limit described in (i) or (ii) above, which is a shorter time period than would normally apply under the analogous provisions of the Takeover Code.

The exemption from breaching either limit described in (i) or (ii) (as described in (2) above) is narrower than the analogous exemption in the Takeover Code because under the Takeover Code acquisitions pursuant to non-cash and partial offers may also be exempt. This potentially provides the Rowan UK Board with greater power to defend a hostile non-cash or partial tender offer than would otherwise be available under the Takeover Code.

As set out in Article 147 of the New Articles, if approved, the Rowan UK Board would have various powers (the exercise of which will be subject to their fiduciary duties) to enforce these provisions (including disenfranchisement (as regards voting and entitlement to distributions) and refusal to register the transfer of shares).

The Rowan UK Board will have the full authority to determine the application of these provisions in the New Articles, including the deemed application of any relevant parts of the Takeover Code and such authority will include all the discretion that the UK Panel on Takeovers and Mergers would exercise if the Takeover Code applied to Rowan UK. The Rowan UK Board will not be required to give any reason for any decision or determination it makes.

The mandatory offer provisions of the Takeover Code were adopted in the U.K. with the philosophy that if effective control of a public company were obtained by the acquisition of shares by a person or group acting in concert, the principle of equality of treatment for shareholders would require that all shareholders should have the opportunity to obtain the price paid per share by those acquiring effective control and to liquidate their investment if they so desire. The ability of shareholders to retain their shares upon completion of a mandatory offer may depend on whether the offeror subsequently causes Rowan UK to propose a court-approved scheme of arrangement that would compel minority shareholders to transfer or surrender their shares in favor of the offeror or, if the offeror has acquired at least 90 percent of the relevant shares, the offeror requires minority shareholders to accept the offer under the ‘squeeze-out’ provisions described in “Description of Class A Ordinary Shares of Rowan UK Squeeze-out & Sell-out Provisions.” In the U.K., the 30 percent threshold is generally felt to be appropriate as it represents the point at which it is considered that, taking into account typical voting patterns for U.K. public companies subject to the Takeover Code, a shareholder may commonly be reasonably likely to be able to cause ordinary resolutions to be passed. The same or similar thresholds apply in all other European Union countries.

 

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Our Board believes that, as an English company, our shareholders should have the benefit of the protections of the mandatory offer provisions that are intended, other than as described above, to be similar to those under the Takeover Code. These provisions could have the effect of discouraging the acquisition and holding of interests of 30 percent or more of issued shares and encouraging those shareholders who may be acting in concert with respect to the acquisition of shares to seek to obtain the consent of the Rowan UK Board before effecting any additional purchases.

Furthermore, as described above, the provisions proposed to be included in the New Articles are subject to certain terms that differ from the terms of the analogous protection under the Takeover Code. These provisions could have the effect of discouraging tender offers that are not all-cash or are for less than all of the issued and outstanding shares unless they have the consent of the Rowan UK Board or the prior approval of the shareholders of Rowan UK. The Board believes these differences are appropriate under Rowan UK’s specific circumstances as they may motivate any potential offeror to either obtain consent of the Rowan UK Board or ensure that shareholders are given the opportunity to liquidate their investment for cash.

*    *    *

Recommendation and Required Vote

The affirmative vote of the holders of a majority of the outstanding shares of common stock of Rowan Delaware entitled to vote at the special meeting is required to approve the mandatory offer provisions in the New Articles. Our Board believes that the mandatory offer provisions are advisable and in the best interests of Rowan Delaware and our stockholders. ACCORDINGLY, OUR BOARD HAS UNANIMOUSLY APPROVED THE MANDATORY OFFER PROVISIONS IN THE NEW ARTICLES. OUR BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE MANDATORY OFFER PROVISIONS IN THE NEW ARTICLES.

The proposal to approve the mandatory offer provisions in the New Articles will not be presented at the special meeting if “Proposal 1 — Approval of the Adoption of the Merger Agreement” is not approved by the requisite vote of our stockholders. The approval of Proposal 2 is not a condition to the approval of Proposal 1. If Proposal 2 is not approved by our stockholders, the mandatory offer provisions described above and set forth in Annex B will not be included in the New Articles upon the consummation of the merger.

 

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PROPOSAL 3 — APPROVAL OF DECLASSIFICATION PROVISIONS IN ROWAN UK’S ARTICLES OF ASSOCIATION

The following includes a brief summary of the material parts of the declassification provisions in the form of the New Articles and which are proposed to be adopted immediately prior to the consummation of the merger, substantially in the form attached to this proxy statement/prospectus as Annex B and incorporated by reference into this proxy statement/prospectus. The declassification provisions are indicated in the New Articles by the use of brackets and bold lettering. We encourage you to read the New Articles in their entirety. In the event of any discrepancy between the declassification provisions in the New Articles and the following summary, the New Articles will control.

The certificate of incorporation and bylaws of Rowan Delaware currently provide that the Board must be divided into three classes, as nearly equal in number as possible, each of which serves for a staggered three-year term. Under the current certificate of incorporation and bylaws, a director’s term of office generally continues until the third annual meeting of stockholders following his or her appointment to office. The declassification provisions would eliminate the classified Board and staggered Board terms in phases, beginning in 2013. If the declassification proposal is approved, directors, including directors elected to a three-year term at the general meeting scheduled for 2012, and any replacement for any such director, would initially continue to serve the remainder of their elected three-year terms. Declassification would then be phased in as set forth below:

 

Scheduled Meeting

 

Action

 

Individuals Anticipated to be
Serving in Relevant Director
Class(es)

2012 General Meeting

  Individuals nominated as Class III directors stand for election for a three-year term  

Class III:

Thomas R. Hix

Suzanne P. Nimocks

P. Dexter Peacock (1)

2013 Annual General

Meeting

  Individuals nominated as Class I directors (whose terms expire at the 2013 annual general meeting) stand for election for a one-year term  

Class I:

William T. Fox III

Sir Graham Hearne

H. E. Lentz

2014 Annual General

Meeting

  Individuals nominated as Class I directors (nominees previously elected for a one-year term at the 2013 annual general meeting or individuals newly designated as nominees) and individuals nominated as Class II directors (whose terms expire at the 2014 annual general meeting) stand for election for a one-year term  

Class I:

William T. Fox III

Sir Graham Hearne

H. E. Lentz

 

Class II:

R. G. Croyle

Lord Moynihan

W. Matt Ralls

John J. Quicke

2015 Annual General Meeting and thereafter

  All directors stand for election for one-year terms  

 

(1) As a result of the Company’s decision to reduce the size of the Board from twelve to ten members in January 2012, two directors, Robert E. Kramek and Frederick R. Lausen, both Class III directors, will depart the Board and have now agreed to do so immediately prior to the redomestication. Mr. P. Dexter Peacock has served as a Class I director of the Company since 2004. As permitted by our bylaws, we have re-assigned Mr. Peacock to Class III in order to apportion the two eliminated Class III directorships among the three classes of directors so as to maintain such classes as nearly equal as possible. Therefore, Mr. Peacock will stand for re-election this year as a Class III director, not a Class I director.

*    *    *

 

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Recommendation and Required Vote

The affirmative vote of the holders of a majority of the outstanding shares of common stock of Rowan Delaware entitled to vote at the special meeting is required to approve the declassification provisions in the New Articles. Our Board believes that the declassification provisions are advisable and in the best interests of Rowan Delaware and our stockholders. ACCORDINGLY, OUR BOARD HAS UNANIMOUSLY APPROVED THE DECLASSIFICATION PROVISIONS IN THE NEW ARTICLES. OUR BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE DECLASSIFICATION PROVISIONS IN THE NEW ARTICLES.

The proposal to approve the declassification provisions in the New Articles will not be presented at the special meeting if “Proposal 1 — Approval of the Adoption of the Merger Agreement” is not approved by the requisite vote of our stockholders. The approval of Proposal 3 is not a condition to the approval of Proposal 1. If Proposal 3 is not approved by our stockholders, the declassification provisions described above and set forth in Annex B will not be included in the New Articles upon the consummation of the merger.

 

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MATERIAL TAX CONSIDERATIONS RELATING TO THE MERGER

This section contains a general discussion of the material tax consequences of (1) the merger, (2) post-merger ownership and disposition of ADS, and (3) post-merger operations of Rowan UK.

The discussion under the caption “— U.S. Federal Income Tax Considerations” addresses (1) application of the U.S. anti-inversion rules to Rowan Delaware, Rowan UK and the exchanging holders, (2) the material U.S. federal income tax consequences of the merger to Rowan Delaware and to Rowan UK, and (3) the material U.S. federal income tax consequences to U.S. holders and non-U.S. holders (each as defined below) of (a) exchanging shares of common stock of Rowan Delaware for ADS in the merger and (b) owning and disposing of ADS received in the merger.

The discussion of the merger and of ownership and disposition of ADS received in the merger under the caption “— U.K. Tax Considerations” addresses the material U.K. tax consequences to stockholders of Rowan Delaware resident for tax purposes in the U.K. and in a country other than the U.K. It also addresses certain U.K. tax considerations of the restructuring for Rowan UK and Rowan Delaware.

The discussion below is not a substitute for an individual analysis of the tax consequences of the merger, post-merger ownership and disposition of ADS or post-merger operations of Rowan UK. You should consult your own tax advisor regarding the particular U.S. (federal, state and local), U.K. and other non-U.S. tax consequences of these matters in light of your particular situation.

U.S. Federal Income Tax Considerations

Subject to the limitations and qualifications described herein, the following discussion constitutes the opinion, as of the date of this proxy statement/prospectus, of Baker & McKenzie LLP, U.S. tax counsel to the Company and Rowan UK (“Tax Counsel”), as to the material U.S. federal income tax consequences to (1) Rowan Delaware and Rowan UK of the merger, and (2) the stockholders of Rowan Delaware of the merger and the post-merger ownership and disposition of ADS.

Scope of Discussion

This discussion constitutes Tax Counsel’s opinion to the extent of the legal conclusions stated herein. This discussion generally does not address any aspects of U.S. taxation other than U.S. federal income taxation, is not a complete analysis or listing of all potential tax consequences of the merger or of holding and disposing of ADS, and does not address all tax considerations that may be relevant to Rowan Delaware stockholders. In particular, the discussion below addresses tax consequences to those who hold their shares of common stock of Rowan Delaware, and who will hold their ADS, solely as capital assets. The discussion below does not address any tax consequences to Rowan Delaware stockholders or Rowan UK shareholders, as applicable, who, for U.S. federal tax purposes, are subject to special rules, such as:

 

   

banks, financial institutions or insurance companies;

 

   

tax-exempt entities;

 

   

persons who hold shares as part of a straddle, hedge, integrated transaction or conversion transaction;

 

   

persons who have been, but are no longer, citizens or residents of the U.S.;

 

   

persons holding shares through a partnership or other fiscally transparent person;

 

   

dealers or traders in securities, commodities or currencies;

 

   

grantor trusts;

 

   

persons subject to the alternative minimum tax;

 

   

U.S. persons whose “functional currency” is not the U.S. dollar;

 

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regulated investment companies or real estate investment trusts;

 

   

controlled foreign corporations or passive foreign investment companies that own shares of common stock of Rowan Delaware, or U.S. persons that own stock in a controlled foreign corporation or passive foreign investment company that owns shares of common stock of Rowan Delaware;

 

   

persons who received the shares of common stock of Rowan Delaware through the exercise of incentive stock options or through the issuance of restricted stock under an equity incentive plan or through a tax qualified retirement plan; or

 

   

persons who own (directly or through attribution) 10 percent or more, determined by voting power or value, of shares of common stock of Rowan Delaware or Rowan UK shares.

This discussion is based on the Code, the Treasury regulations promulgated thereunder, or the “Treasury Regulations,” judicial and administrative interpretations thereof, and the Convention Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Gains, or the “U.K.-U.S. Tax Treaty,” in each case as in effect and available on the date of this proxy statement/prospectus. Each of the foregoing is subject to change, which change could apply with retroactive effect and could affect the tax consequences described in this proxy statement/prospectus. Neither Rowan Delaware nor Rowan UK will request a ruling from the IRS as to the U.S. federal tax consequences of the merger, post-merger ownership and disposition of ADS or any other matter. There can be no assurance that the IRS will not challenge any of the U.S. federal tax consequences described below.

For purposes of this discussion, a “U.S. holder” is a beneficial owner of shares of common stock of Rowan Delaware or, after the completion of the merger, ADS, that for U.S. federal income tax purposes is:

 

   

an individual citizen or resident alien of the U.S.;

 

   

a corporation or other entity taxable as a corporation created or organized in or under the laws of the U.S. or any state thereof or the District of Columbia;

 

   

an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust, if such trust validly has elected to be treated as a U.S. person for U.S. federal income tax purposes or if (1) a U.S. court can exercise primary supervision over its administration and (2) one or more U.S. persons have the authority to control all of the substantial decisions of such trust.

A “non-U.S. holder” is a beneficial owner of shares of common stock of Rowan Delaware or, after the completion of the merger, ADS, other than a U.S. holder or an entity or arrangement treated as a partnership for U.S. federal income tax purposes, or a “Partnership.” If a Partnership is a beneficial owner of shares of common stock of Rowan Delaware or ADS, the tax treatment of a partner in that Partnership will generally depend on the status of the partner and the activities of the Partnership. Holders of shares of common stock of Rowan Delaware or ADS that are Partnerships and partners in such Partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them of the merger and the ownership and disposition of ADS. For purposes of this discussion, “holder,” “stockholder” or “shareholder” mean either a U.S. holder or a non-U.S. holder or both, as the context may require.

For U.S. federal income tax purposes, the conversion of each outstanding share of common stock of Rowan Delaware into the right to receive one ADS upon the consummation of the merger generally will be treated as an exchange of such share for one ADS. Therefore, the U.S. federal income tax discussion contained herein refers to an “exchange” rather than a “conversion” in describing the U.S. federal income tax consequences of the merger.

The U.S. Anti-Inversion Rules

Although Rowan UK is incorporated in the U.K., the IRS may assert that Rowan UK should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes under Section 7874 of

 

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the Code. At the time of enactment of Section 7874 of the Code in 2004, a number of publicly-traded U.S. multinational corporations had expatriated to non-U.S. jurisdictions. In most cases, those corporations expatriated to tax haven jurisdictions in which the applicable U.S. multinational corporation had no (or minimal) historic or current business activities. As a general matter, absent the application of Section 7874 of the Code, a corporation is considered, for U.S. federal income tax purposes, to be a foreign corporation (and, therefore, a non-U.S. tax resident) if it is organized or incorporated outside the U.S.

Notwithstanding the general rule set forth above, under Section 7874 of the Code, a corporation organized or incorporated outside the U.S. will be treated as a U.S. corporation for U.S. federal income tax purposes, when (i) the foreign corporation directly or indirectly acquires substantially all of the assets held directly or indirectly by a U.S. corporation, (ii) the stockholders of the acquired U.S. corporation hold at least 80 percent of the vote or value of the shares of the foreign acquiring corporation by reason of holding stock in the U.S. acquired corporation, and (iii) the foreign corporation’s “expanded affiliated group” does not have substantial business activities in the foreign corporation’s country of incorporation relative to its expanded affiliated group’s worldwide activities. Solely for purposes of Section 7874 of the Code, “expanded affiliated group” means the foreign corporation and all subsidiaries in which the foreign corporation, directly or indirectly, owns more than 50 percent of the stock by vote and value.

Rowan UK will indirectly acquire all of the assets of Rowan Delaware, and the former stockholders of Rowan Delaware will acquire, as a result of the merger, 100 percent of the share capital of Rowan UK by reason of holding shares of common stock of Rowan Delaware. After the merger, however, the Rowan UK expanded affiliated group intends to continue the substantial business activities in the U.K. that the Rowan Delaware expanded affiliated group currently conducts.

Section 7874 of the Code does not define the term “substantial business activities” or otherwise quantify the activities that the foreign corporation and its expanded affiliated group should have in the foreign corporation’s country of incorporation. Neither the Temporary Treasury Regulations issued under Section 7874 of the Code in June 2009, the “2009 Regulations,” nor later IRS administrative guidance objectively defines or quantifies the term “substantial business activities.” Rather, the 2009 Regulations provide that whether a foreign corporation’s expanded affiliated group has substantial business activities in the foreign corporation’s country of organization in relation to its worldwide activities is based on all facts and circumstances. The 2009 Regulations provide that relevant items to be considered in determining whether an expanded affiliated group has substantial business activities in a foreign country when compared to the total activities of the expanded affiliated group include, but are not limited to, the following:

 

  (i) business activities in the foreign country that are material to the achievement of the expanded affiliated group’s overall business objectives;

 

  (ii) the historical conduct of continuous business activities in the foreign country by the U.S. corporation’s expanded affiliated group prior to the acquisition of the U.S. corporation’s assets;

 

  (iii) the conduct of continuous business activities of the expanded affiliated group in the foreign country occurring in the ordinary course of one or more active trades or businesses involving:

 

  (A) property the expanded affiliated group owns that is located in the foreign country,

 

  (B) the performance of services by individuals in the foreign country who are employed by the expanded affiliated group, and

 

  (C) sales of goods or services to customers in the foreign country by the expanded affiliated group;

 

  (iv) the performance of substantial managerial activities in the foreign country by expanded affiliated group officers and employees who are based in the foreign country; and

 

  (v) a substantial degree of ownership of the expanded affiliated group by investors resident in the foreign country.

 

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The 2009 Regulations further provide that the presence or absence of any of the above items is not determinative, and the weight given to any item depends on the facts and circumstances. Former temporary Treasury Regulations issued in 2006, the “2006 Regulations,” contained a “safe harbor” that focused solely on the items listed in (iii) above. The “safe harbor” tested whether the percentage of each item in the foreign corporation’s country of incorporation equaled or exceeded 10 percent of such item worldwide over a 12 month testing period or at the end of such testing period. Thus, under the 2006 Regulations, a foreign corporation was generally deemed to meet the substantial business activities test “safe harbor” if the relevant assets, employees and revenues of the expanded affiliated group in the foreign corporation’s country of incorporation constituted at least 10 percent of the expanded affiliated group’s worldwide assets, employees and revenues, respectively. The 2009 Regulations contain no “safe harbor” or examples to illustrate the application of the relevant factors to determine whether substantial business activities exist. There is no judicial or administrative guidance on the meaning of “substantial business activities” for purposes of Section 7874 of the Code.

Notwithstanding the absence of a “safe harbor” or other quantitative guidance in the 2009 Regulations, it is the opinion of Tax Counsel that, as of the date of this proxy statement/prospectus, the activities the Rowan Delaware expanded affiliated group conducts in the U.K. should satisfy the substantial business activities test set forth in the 2009 Regulations. Moreover, it is a condition to closing of the merger that Rowan UK receives from each of Tax Counsel, and Ernst & Young LLP, tax advisor to the Company and Rowan UK, an opinion, as of the effective date of the merger, concluding that Rowan UK should not be treated as a U.S. corporation under Section 7874 of the Code.

(i) U.K. Activities Material to Overall Strategic Business Objectives

We believe that a growing part of our business will continue to come from customer contracts outside the U.S., or the “Foreign Drilling Markets.”

Over the past 20 years, U.S.-based major integrated oil companies and major independents have expanded outside of the U.S. Consequently, we perform the vast majority of our work in the Foreign Drilling Markets. This trend is driven by the fact that a large percentage of the world’s remaining hydrocarbons are located outside of the U.S. Specifically, 99 percent of the proven worldwide oil reserves and 94 percent of the proven worldwide gas reserves are located outside the U.S. Accordingly, we expect the best opportunities for premium jack-up rig and ultra-deepwater drillship operations to be in the Foreign Drilling Markets. Moreover, the national oil companies, or “NOCs,” control in excess of 70 percent of all proven worldwide oil and gas reserves, and all of the NOCs are headquartered in and operate outside of the U.S. These NOCs, and the international oil companies with which they partner, now represent our most important customer base for the future. The U.K. is geographically positioned closer to our customers and the most hydrocarbon-rich areas of the world.

In connection with Macondo incident, the U.S. government imposed moratoriums/suspensions (which now have been lifted), related Notices to Lessees (“NTLs”) and delays in processing drilling permits. Current or future NTLs or other directives and regulations may further impact our customers’ ability to obtain permits and commence or continue deep- or shallow-water operations in the U.S. Gulf of Mexico. Additional governmental regulations and requirements concerning licensing, equipment specifications and training requirements could increase the costs of our operations, increase certification and permitting requirements, increase review periods and impose increased liability on U.S. Gulf of Mexico operations.

As a result of these and other dynamics impacting the drilling industry, including the location of the world’s oil and gas reserves, Rowan Delaware and its competitors have witnessed a steady migration of offshore drilling rigs out of the U.S. Gulf of Mexico to international markets since 2000. Consistent with these global trends, approximately 72 percent of our total revenues from all sources for the year ending December 31, 2011, was from non-U.S. sources and we project that this percentage will increase to 81 percent in 2012 and 84 percent in 2013.

 

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Our primary goal is to continue to be a leading global offshore drilling contractor to the international oil and gas industry. In particular, we wish to be a leading provider of premium jack-up rig and ultra-deepwater drillship operations in the Foreign Drilling Markets. To achieve this objective, we have determined that Rowan should increase its U.K. presence by holding the following meetings in the U.K.:

 

   

quarterly board meetings;

 

   

annual general meeting of shareholders;

 

   

four to six senior management meetings each year;

 

   

quarterly management meetings of the Chief Operating Officer, all Operations Vice Presidents, General Managers and Country managers; and

 

   

annual meetings of our operations senior managers.

Senior management will use these opportunities to visit current and potential customers (including, many international oil companies, which have main offices in the U.K.), which management can more effectively do when traveling as a group to the U.K. for Board and management meetings. This participation in marketing and sales by the highest levels of management increases the likelihood of achieving our goal of pursuing the Foreign Drilling Markets.

As a result, our assets, activities and employees in the U.K., along with the management and control of drilling contracts throughout Europe, are critically important for us to achieve our current and future business objectives. The restructuring will efficiently leverage our existing European regional operations, and provide a growing hub for us to respond to our customers and manage our operations in the Foreign Drilling Markets.

(ii) Historical Conduct of Continuous Business Activities in the U.K.

The Rowan Delaware expanded affiliated group established its North Sea operations in 1980 and, since 2001, has maintained its operations headquarters in Aberdeen, Scotland. Over the past 30 years, it has continuously engaged in drilling activities within the U.K. sector of the North Sea, and has periodically expanded operations to the Dutch and Norwegian sectors, all of which were managed from its U.K. headquarters. In the future, the expanded affiliated group will continue to use the U.K. to manage drilling operations conducted in Europe, Africa and certain other areas of the world. The Europe and Africa regions, including the U.K., generated approximately 33 percent of Rowan Delaware’s worldwide revenues from offshore drilling in 2011 and are projected to account for approximately 38 percent and 40 percent of worldwide revenues from offshore drilling in 2012 and 2013, respectively. For the strategic business reasons discussed above, including most importantly the location of the world’s proven oil and gas reserves and the NOCs, the Rowan Delaware expanded affiliated group’s drilling activities in the U.K. sector, in particular, and in the North Sea, in general, have increased since 1980.

(iii) Continuous Business Activities Involving U.K. Property, Employees and Revenues

In the ordinary course of its offshore drilling business, the Rowan Delaware expanded affiliated group has been engaged in continuous and substantial business activities within the U.K. Moreover, to meet its business objectives going forward, it is strategically important that the expanded affiliated group of Rowan UK continue the conduct of continuous and substantial business activities in the U.K. Evidencing the Rowan Delaware expanded affiliated group’s substantial business activities within the U.K., the Rowan Delaware expanded affiliated group owns and operates substantial assets located in the U.K., including drilling rigs, an office building, drilling equipment and spares and supplies that are part of our historic and continuous business activities in the U.K. Specifically, approximately 28 percent of the net book value, excluding liabilities, of our property, plant and equipment, including rigs, was located in the U.K. and dedicated to our U.K. operations as of December 31, 2011. This percentage is expected to be approximately 28 percent and 16 percent in 2012 and 2013, respectively, when measured by the number of months in each calendar year that our existing customer

 

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contracts and related forecasts project that our rigs will be located in the U.K. sector of the North Sea. Our U.K.-managed rigs are subject to customer contracts that periodically require the movement of our rigs within the North Sea. Excluding rigs that, pursuant to customer contracts entered into on or before the date of this proxy statement/prospectus, are scheduled to move outside the U.K. sector of the North Sea at any time following the merger, we expect the percentage of net book value, excluding liabilities, of our property, plant and equipment located in the U.K. and dedicated to our U.K. operations in 2012 and 2013 to be approximately 14 percent and 13 percent, respectively.

The Rowan Delaware expanded affiliated group also had approximately 600 employees that were based in and performed services in the U.K. at the end of 2011, which was approximately 22 percent of the global headcount at the time. This percentage is expected to be approximately 20 percent and 13 percent in 2012 and 2013, respectively, when measured by the number of months in each calendar year that an employee is projected to spend in the U.K., as contemplated by our existing customer contracts and related forecasts. Excluding employees that are expected to work on rigs that, pursuant to customer contracts entered into on or before the date of this proxy statement/prospectus, are scheduled to move outside the U.K. sector of the North Sea at any time following the merger, we expect the percentage of our employees located in the U.K. to be approximately 13 percent and 11 percent in 2012 and 2013, respectively.

With respect to revenues, the U.K. has become an important market for the Rowan Delaware expanded affiliated group over the last four years. As a percentage of the Rowan Delaware expanded affiliated group’s worldwide revenues from offshore drilling, third-party customer revenues received for performing drilling services in the U.K. have fluctuated from a low of 10 percent to a high of 22 percent from 2007 to 2010, averaging approximately 15 percent. U.K. offshore drilling revenues accounted for approximately 25 percent of the Rowan Delaware expanded affiliated group’s worldwide revenues from offshore drilling in 2011. This percentage is expected to be approximately 30 percent in 2012 and 16 percent in 2013, when measured by the number of months in each calendar year that our existing customer contracts and related forecasts project that our rigs will operate in the U.K. sector of the North Sea. Excluding revenues from rigs that, pursuant to customer contracts entered into on or before the date of this proxy statement/prospectus, are scheduled to move outside the U.K. sector of the North Sea at any time following the merger, we expect the percentage of our revenues from offshore drilling in the U.K. to be approximately 17 percent and 14 percent in 2012 and 2013, respectively.

Additionally, the percentage of worldwide offshore drilling revenue from services performed within the North Sea significantly increases if revenues from contracts in the Norwegian sector of the North Sea are included. Furthermore, Europe (including the U.K. and Norway) and Africa regions, which are managed and controlled from the U.K., accounted for approximately 33 percent of worldwide revenues from offshore drilling in 2011 and are projected to account for 38 percent and 40 percent of worldwide revenues from all sources in 2012 and 2013, respectively. These percentages reflect the overall shift of our operations to the Foreign Drilling Markets, which accounted for approximately 72 percent of our total revenues in 2011, and are expected to account for 81 percent of total revenue in 2012 and 84 percent of total revenue in 2013.

(iv) Substantial Management Activities in the U.K.

We currently have a General Manager, an Operations Manager, an Assistant Operations Manager and a Vice President of Sales and Marketing based in the U.K., who oversee operations relating to six rigs working in the North Sea, and will manage any future operations in Africa. Since the U.K. is responsible for our largest overseas operating region (measured in terms of aggregate daily revenues at December 31, 2011), a significant amount of management occurs in our U.K. office. We have implemented matrix management; thus the regional departmental heads of Human Resources, Finance, Maintenance, Engineering and Health, Safety and the Environment located in Aberdeen report through both the U.K. Operations Manager and the corporate offices. The General Manager in Aberdeen and his direct reports manage a group of about 750 employees who spend more than 50 percent of their time in the U.K. offices or on rigs located in the North Sea.

 

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For the strategic business reasons discussed above, management in the U.K. has grown. More importantly, for the same reasons, we expect this long-term historic growth of management in the U.K. to continue. We expect to concentrate more of our management activities in the U.K. through senior management and board meetings in the U.K. at which strategic decisions are made. In addition, operations management meetings will be held in the U.K., including:

 

   

quarterly management meetings of the Chief Operating Officer, all Operations Vice Presidents, General Managers and Country managers; and

 

   

annual meetings of our senior operations managers.

We have determined that it is important for senior management to visit customers and the Foreign Drilling Markets where we conduct our operations, which will be more convenient when management travels more frequently to the U.K. because so many international oil companies that partner with the NOCs have locations in the U.K. Given the strategic location of the U.K. and our long-term historic presence in the U.K., we have determined that increased management presence in the U.K. will help us achieve our strategic objectives, as outlined above.

(v) Substantial U.K. Investors

Rowan Delaware does not currently have a substantial number of stockholders resident in the U.K. Mutual funds and institutional investors own approximately 89 percent of the total shares of common stock of Rowan Delaware outstanding. We do not currently contemplate a dual listing of Rowan UK Class A Ordinary Shares on the London Stock Exchange. Nevertheless, we believe that it will be easier to develop relationships with potential U.K. and other European investors and grow our investor base once our senior management team travels more frequently to the U.K. for Board and management meetings and use these opportunities in the U.K. to increase investor familiarity with the Rowan name in Europe. The enhanced relationships with potential U.K. and European investors are likely to result in an expanded U.K. and European Union shareholder base. However, it is unlikely that U.K. residents will comprise a substantial portion of our shareholder base in the near term.

Based on the foregoing, the Rowan Delaware expanded affiliated group should have substantial business activities in the U.K., and as a result, Rowan UK should not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code following the merger.

Material Tax Consequences of the Merger to Rowan Delaware and Rowan UK

Neither Rowan Delaware nor Rowan UK will be subject to U.S. federal income tax as a result of the merger.

Material Tax Consequences to Stockholders

Material Tax Consequences to U.S. Holders

The following discussion of material U.S. federal income tax consequences to U.S. holders is based on the opinion of Tax Counsel, as of the date of this proxy statement/prospectus, which is to be confirmed by the opinions of Tax Counsel and Ernst & Young LLP, as of the effective date of the merger, that Rowan UK should be respected as a U.K. corporation for U.S. federal income tax purposes.

Consequences of the Merger

The merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and/or an exchange under Section 351 of the Code. As discussed above, however, Rowan UK should be respected as a foreign corporation and, therefore, special rules contained in Section 367(a) of the Code, and the Treasury Regulations promulgated thereunder, should require that U.S. holders of Rowan Delaware exchanging shares of

 

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common stock of Rowan Delaware for ADS pursuant to the merger recognize gain, if any, but not loss on such exchange. The amount of gain recognized should equal the excess, if any, of the fair market value of ADS received in the merger over the U.S. holder’s adjusted tax basis in the shares of common stock of Rowan Delaware exchanged therefor. In determining the amount of gain recognized, each share of common stock of Rowan Delaware transferred should be treated as the subject of a separate exchange. Thus, if a U.S. holder transfers some shares of common stock of Rowan Delaware on which gains are realized and other shares of common stock of Rowan Delaware on which losses are realized, the U.S. holder may not net the losses against the gains to determine the amount of gain recognized.

Generally, this gain, if any, should be capital in nature. Any capital gain generally should be long-term capital gain if the U.S. holder’s holding period for its shares of common stock of Rowan Delaware is more than one year at the time of the merger. A U.S. holder’s long-term capital gain is used in determining that holder’s net capital gain (i.e., generally, capital gain in excess of capital loss), which is currently taxed at a maximum federal income tax rate of 15 percent. If the U.S. holder has held its shares of common stock of Rowan Delaware for one year or less at the time of the merger, any capital gain generally should be short-term capital gain. A U.S. holder that exchanges shares of common stock of Rowan Delaware for ADS pursuant to the merger should have an adjusted tax basis in the ADS it receives equal to the adjusted tax basis of the shares of common stock of Rowan Delaware exchanged therefor, increased by the amount of gain recognized, if any.

A U.S. holder should not be permitted to recognize any loss realized on the exchange of its shares of common stock of Rowan Delaware in the merger. The adjusted tax basis of the ADS received by a U.S. holder with a loss on its shares of common stock of Rowan Delaware should be equal to such U.S. holder’s adjusted tax basis in its shares of common stock of Rowan Delaware surrendered in exchange therefor. Thus, subject to any subsequent changes in the fair market value of the ADS, any loss should be preserved.

The holding period for any ADS received by a U.S. holder pursuant to the merger should include the holding period of the shares of common stock of Rowan Delaware exchanged therefor.

U.S. holders are urged to consult their tax advisors as to the particular consequences of the exchange of shares of common stock of Rowan Delaware for ADS pursuant to the merger.

Consequences of Owning and Disposing of ADS

Receiving Distributions on ADS

Subject to the discussion below under “— Passive Foreign Investment Company Provisions,” U.S. holders will be required to include in gross income the gross amount of any distribution received on the ADS to the extent that the distribution is paid out of Rowan UK’s current or accumulated earnings and profits as determined for U.S. federal income tax purposes. We refer to such a distribution herein as a dividend. With respect to non-corporate U.S. holders, certain dividends received in taxable years beginning before January 1, 2013, from a qualified foreign corporation will be subject to U.S. federal income tax at a maximum rate of 15 percent. As long as the ADS are listed on the NYSE (or certain other stock exchanges) and/or Rowan UK qualifies for benefits under the U.K.-U.S. Tax Treaty, Rowan UK should be treated as a qualified foreign corporation for this purpose. This reduced rate will not be available in all situations, and U.S. holders should consult their own tax advisors regarding the application of the relevant rules to their particular circumstances. U.S. holders generally should not be eligible for dividends-received deduction with respect to dividends from Rowan UK.

Distributions in excess of the current and accumulated earnings and profits of Rowan UK generally will be applied first to reduce the U.S. holder’s tax basis in its ADS, and thereafter generally will constitute gain from the sale or exchange of such shares. In the case of a non-corporate U.S. holder, the maximum U.S. federal income tax rate applicable to such “gain” is 15 percent under current law if the holder’s holding period for such ADS exceeds 12 months. This reduced rate is scheduled to expire effective for taxable years beginning after

 

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December 31, 2012. Special rules not described herein may apply to U.S. holders who do not have a uniform tax basis and holding period in all of their ADS, and any such U.S. holders are urged to consult their own tax advisors with regard to such rules.

Dividends paid by Rowan UK with respect to the ADS generally should be income from sources outside the U.S. and should, depending on a U.S. holder’s circumstances, generally be “passive” income for purposes of computing any foreign tax credit available to the holder. However, at least a portion of dividends paid by Rowan UK generally should be U.S. source income if, and to the extent that, more than a de minimis amount of the earnings and profits of Rowan UK out of which the dividends are paid are from sources within the U.S. At least a portion of dividends paid by Rowan UK could also be U.S. source income under certain other circumstances that we consider unlikely to arise. U.S. holders should consult their own tax advisors concerning the implications of U.S. foreign tax credit rules in light of their particular circumstances.

Dispositions of ADS

Subject to the discussion below under “— Passive Foreign Investment Company Provisions,” a U.S. holder of ADS generally will recognize capital gain or loss for U.S. federal income tax purposes on the sale, exchange or other taxable disposition of ADS in an amount equal to the difference between the amount realized from such sale, exchange or other taxable disposition and the U.S. holders’ adjusted tax basis in such shares. In the case of a non-corporate U.S. holder, the maximum U.S. federal income tax rate applicable to such gain is 15 percent under current law if the holder’s holding period for such ADS exceeds 12 months. This reduced rate is scheduled to expire effective for taxable years beginning after December 31, 2012. The deductibility of capital losses are subject to limitations. The capital gain or loss will generally be income or loss from sources within the U.S. for foreign tax credit limitation purposes.

Passive Foreign Investment Company Provisions

The treatment of U.S. holders of ADS in some cases could be materially different from that described above if, at any relevant time, Rowan UK were a passive foreign investment company, which we refer to as a PFIC. For U.S. federal income tax purposes, a foreign corporation is classified as a PFIC for any taxable year if either (i) 75 percent or more of its gross income is “passive income” (as defined for U.S. federal income tax purposes) or (ii) the average percentage of assets held by such corporation which produce passive income or which are held for the production of passive income is at least 50 percent. For purposes of applying the tests in the preceding sentence, the foreign corporation is deemed to own its proportionate share of the assets, and to receive directly its proportionate share of the income, of certain other corporations of which the foreign corporation owns, directly or indirectly, at least 25 percent by value of the stock.

Rowan UK believes that it should not be a PFIC following the merger. For purposes of determining whether we are a PFIC, we believe our income from offshore contract drilling services should be treated as rental income derived from the active conduct of a drilling rig leasing business. Accordingly, we believe that our income from our offshore contract drilling activities (i.e., rig leasing) should not constitute “passive income,” and the assets that we own and operate in connection with the production of that income should not constitute passive assets.

For U.S. federal income tax purposes not related to the PFIC regime, a 2009 Fifth Circuit Court of Appeals decision and an IRS pronouncement which, in part, follows such decision, characterize income from time chartering of vessels as rental income rather than services income. However, the IRS subsequently announced that it does not agree with, and will not acquiesce to, the decision by the Fifth Circuit Court of Appeals and further stated that the time charters at issue in the case would be treated as producing services income, which is not considered passive income for PFIC purposes. Nonetheless, based on the Fifth Circuit decision, we believe our income from offshore contract drilling activities (i.e., rig leasing) is rental income. We believe such income should not be treated as passive income because we engage in active leasing of our drilling rigs. Therefore, the assets that we own and operate in connection with the production of that income should not constitute passive

 

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assets, for PFIC purposes, because such income is derived from the active conduct of a leasing business. No assurance can be given that the IRS or a court will accept our position, and there is a risk that the IRS or a court could determine that we are a PFIC.

The tests for determining PFIC status are applied annually, and it is difficult to accurately predict future income and assets relevant to this determination. Accordingly, Rowan UK cannot assure U.S. holders that it will not become a PFIC. If Rowan UK should determine in the future that it is a PFIC, it will endeavor to so notify U.S. holders of ADS, although there can be no assurance that it will be able to do so in a timely and complete manner. U.S. holders of ADS should consult their own tax advisors about the PFIC rules, including the availability of certain elections.

Medicare Tax

For taxable years beginning after December 31, 2012, a U.S. holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8 percent tax (the “Medicare Tax”) on the lesser of (a) the U.S. holder’s “net investment income” for the relevant taxable year and (b) the excess of the U.S. holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between US$125,000 and US$250,000 depending on the individual’s circumstances). A U.S. holder’s net investment income will generally include dividends received on the ADS and net gains from the disposition of ADS, unless such dividend income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). A U.S. holder that is an individual, estate or trust should consult the holder’s tax advisor regarding the applicability of the Medicare Tax to the holder’s dividend income and gains in respect of the holder’s investment in the ADS.

Material Tax Consequences to Non-U.S. Holders

Consequences of the Merger

A non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on gain realized, if any, on the exchange of shares of common stock of Rowan Delaware for ADS unless: (1) such gain is effectively connected with the conduct by the non-U.S. holder of a trade or business within the U.S. (or, if a tax treaty applies, is attributable to a permanent establishment or fixed place of business maintained by the non-U.S. holder in the U.S.); (2) in the case of certain capital gains recognized by a non-U.S. holder that is an individual, such individual is present in the U.S. for 183 days or more during the taxable year in which the capital gain is recognized and certain other conditions are met; (3) the non-U.S. holder is subject to backup withholding; or (4) Rowan Delaware is or has been a “U.S. real property holding corporation” within the meaning of Section 897(c)(2) of the Code at any time within the shorter of the five-year period preceding the merger or such non-U.S. holder’s holding period, and the non-U.S. holder holds, or has held at any time during such shorter period, more than five percent of the shares of common stock of Rowan Delaware. Rowan Delaware does not believe that it is or has been a U.S. real property holding corporation within the last five years.

If a non-U.S. holder is a citizen or resident of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax consequences of the exchange of shares of common stock of Rowan Delaware for ADS will depend on the applicable tax laws in such country.

Consequences of Owning and Disposing of ADS

Receiving Distributions on ADS

A non-U.S. holder generally should not be subject to U.S. federal income or withholding tax on dividends from Rowan UK unless: (1) the dividends are effectively connected with the non-U.S. holder’s conduct of a trade or business in the U.S. (or, if a tax treaty applies, the dividends are attributable to a permanent establishment or fixed place of business maintained by the non-U.S. holder in the U.S.); or (2) such non-U.S. holder is subject to backup withholding.

 

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Disposition of ADS

In addition, a non-U.S. holder generally should not be subject to U.S. federal income or withholding tax on any gain recognized on the sale, exchange or other disposition of ADS unless: (1) such gain is effectively connected with the conduct by the non-U.S. holder of a trade or business within the U.S. (or, if a tax treaty applies, is attributable to a permanent establishment or fixed place of business maintained by the non-U.S. holder in the U.S.); (2) in the case of certain capital gains recognized by a non-U.S. holder that is an individual, such individual is present in the U.S. for 183 days or more during the taxable year in which the capital gain is recognized and certain other conditions are met; or (3) the non-U.S. holder is subject to backup withholding.

If a non-U.S. holder is a citizen or resident of, or otherwise subject to taxation in, a country other than the U.S. or the U.K., the tax consequences of owning and disposing of ADS will depend on the applicable tax laws in such country.

Material Tax Consequences to U.S. Holders if Rowan UK is Ultimately Determined to Be a U.S. Corporation for U.S. Federal Income Tax Purposes

Notwithstanding the foregoing, it is possible that the IRS may assert and ultimately establish that Rowan UK should be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code. If the IRS were to prevail, Section 1.7874-2T(m)(1) of the 2009 Regulations provides that Rowan UK would be deemed to convert to a U.S. corporation in a “reorganization” described in Section 368(a)(1)(F) of the Code on the day before the effective date of the merger. Consequently, the merger would be treated as the acquisition of a U.S. corporation, Rowan Delaware, by another U.S. corporation, Rowan UK. In the event that Rowan UK is treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code, the merger would continue to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and/or an exchange under Section 351 of the Code, but the holders of shares of common stock of Rowan Delaware would not be subject to U.S. federal income tax on the receipt of ADS in exchange for their shares of common stock of Rowan Delaware under Section 367(a) of the Code. In this case, the adjusted tax basis of the ADS received by a U.S. holder would be equal to the holder’s adjusted tax basis in its shares of common stock of Rowan Delaware exchanged therefor. In addition, the holding period for the ADS received by U.S. holders would include the holding period of the shares of common stock of Rowan Delaware exchanged therefor. The U.S. federal income tax consequences of owning and disposing of the ADS would be the same as those of owning and disposing of shares of common stock of Rowan Delaware.

If the IRS challenges the position that Rowan UK is a foreign corporation for U.S. federal tax purposes under Section 7874 of the Code, a final determination resulting from the ensuing tax controversy may not be known until several years following the merger. Consequently, a U.S. holder that reported gain on its U.S. income tax return under Section 367(a) of the Code as a result of the merger (as discussed above) may need to file an amended U.S. federal income tax return for the year in which the merger occurred to reflect that the U.S. holder should not have recognized gain under Section 367(a) of the Code. A U.S. holder may also need to file an amended U.S. federal income tax return for any taxable year in which the U.S. holder disposed of any shares received in the merger to reflect that the U.S. holder’s adjusted tax basis in the ADS should equal the holder’s adjusted tax basis in its shares of common stock of Rowan Delaware exchanged therefor.

Importantly, it is possible that a tax controversy on the application of Section 7874 of the Code to the merger may not be resolved within the period of time a holder is eligible to file an amended return. As such, it is possible that certain holders may not have the opportunity to amend their U.S. income tax returns for the year of the merger, or their subsequent tax returns, as described herein. Thus, certain holders who recognize gain under Section 367(a) of the Code could lose the opportunity to seek a refund of tax paid with respect to this gain if the IRS asserts and ultimately establishes that no gain should have been realized by the holder because Rowan UK should have been treated as a U.S. corporation for U.S. federal tax purposes under Section 7874 of the Code. In addition, the holders may not be permitted to increase their adjusted basis in their ADS, notwithstanding that the holders recognized gain under Section 367(a) of the Code.

 

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Information Reporting and Backup Withholding

U.S. holders that own at least five percent (of total voting power or total value) of Rowan Delaware immediately before the merger, and/or at least five percent (of total voting power or total value) of Rowan UK immediately after the merger, will be required to file with the IRS certain Section 368(a) reorganization and/or Section 351 statements. Other information reporting, including with respect to certain U.S. holders, information reporting on IRS Form 926, could also apply to the merger. Rowan Delaware stockholders should consult their own tax advisors about the information reporting requirements that could be applicable to the exchange of shares of shares of common stock of Rowan Delaware for ADS in the merger and any potential penalties associated with a failure to satisfy such requirements.

Dividends on ADS paid within the U.S. or through certain U.S.-related financial intermediaries should be subject to information reporting unless the holder is a corporation, other exempt recipient or non-U.S. holder who establishes such foreign status. Dividends subject to information reporting are subject to backup withholding (currently at a 28 percent rate but increasing to 31 percent for amounts paid after December 31, 2012) unless the payee furnishes the payor with a taxpayer identification number (“TIN”) and satisfies certain certification requirements. Information reporting and backup withholding may also apply to the payment of proceeds from a sale of ADS within the U.S. or through certain U.S.-related intermediaries. Any amounts withheld under the backup withholding rules generally may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided the holder timely furnishes certain required information to the IRS. If a U.S. holder of ADS does not provide us (or our paying agent) with the holder’s correct TIN or other required information, the holder may be subject to penalties imposed by the IRS.

For a non-U.S. holder to avoid backup withholding on a subsequent disposition of ADS, or dividends paid on those ADS, the non-U.S. holder may be required to provide a TIN, certify the holder’s foreign status or otherwise establish an exemption.

Section 6038D of the Code, enacted in 2010, requires an individual who holds an interest in a “specified foreign financial asset” during any taxable year beginning after March 18, 2010, to attach to such person’s return of federal income tax for such taxable year, certain information with respect to such specified foreign financial asset, including the name and address of the issuer and information necessary to identify the class or issue of which such stock is a part. Temporary Regulations issued December 15, 2011 prescribe Form 8938 (Statement of Specified Financial Assets) as the appropriate means to comply with Section 6038D of the Code. Rowan UK ADS should be a specified foreign financial asset unless such ADS are held in an account maintained by a financial institution. Any shareholder who does not intend to hold their shares of Rowan UK in an account maintained by a financial institution should consult his or her own tax advisor with respect to the requirement to provide such information as an attachment to such shareholder’s federal income tax return for any year in which any such shares are held in such manner.

Holders should consult their tax advisor regarding the application of information reporting and backup withholding to their particular situations.

THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH ROWAN DELAWARE STOCKHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES THAT MAY APPLY TO SUCH STOCKHOLDER.

U.K. Tax Considerations

Material Tax Consequences to Shareholders

Scope of Discussion

The following paragraphs are intended as a general guide to current U.K. tax law and HMRC practice applying as at the date of this document (both of which are subject to change at any time, possibly with

 

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retrospective effect) in respect of the taxation of capital gains, the taxation of dividends paid by Rowan UK and stamp duty and stamp duty reserve tax on the transfer of Class A Ordinary Shares, uncertificated ADS and ADS evidenced by ADRs. They do not constitute legal or tax advice and relate only to persons who are beneficial owners of the ADS, or the “ADS Holders.” These paragraphs may not relate to certain classes of holders of the ADS, such as employees or directors of Rowan UK or its affiliates, persons who are connected with Rowan UK, insurance companies, charities, collective investment schemes, pension schemes or persons who hold ADS otherwise than as an investment, or individuals who are not domiciled in the U.K. These paragraphs do not describe all of the circumstances in which ADS Holders may benefit from an exemption or relief from taxation. It is recommended that all ADS Holders obtain their own taxation advice. In particular, non-U.K. resident or domiciled ADS Holders are advised to consider the potential impact of any relevant double tax agreements.

Taxation of Merger

Capital Gains Tax

At the effective time of the merger, an individual stockholder of Rowan Delaware who is resident or ordinarily resident in the U.K. will be treated as disposing of his or her stock of Rowan Delaware for a consideration equal to the market value of the stock at that time, which may, depending on the stockholder’s individual circumstances, give rise to a chargeable gain or an allowable loss for the purposes of capital gains tax. An individual stockholder who is neither resident nor ordinarily resident in the U.K. will not be chargeable to capital gains tax on capital gains arising on the disposal of his or her stock of Rowan Delaware, unless the stockholder carries on a trade, profession or vocation in the U.K. through a branch or agency in the U.K. and the stock was acquired, used in or for the purposes of the branch or agency or used in or for the purposes of the trade, profession or vocation carried on by the stockholder through the branch or agency. In these circumstances, the stockholder will be treated as disposing of their stock of Rowan Delaware for a consideration equal to the market value of the stock at that time, which may, depending on the stockholder’s individual circumstances, give rise to a chargeable gain or an allowable loss for the purposes of capital gains tax. For the tax year 2011/2012, the rate of capital gains tax on chargeable gains is 18 percent or 28 percent (or a combination of the two rates) depending, broadly, on whether an individual stockholder of Rowan Delaware is liable to income tax at the basic or higher/additional rate.

Income Tax

The merger should not be treated as giving rise to a distribution which will be chargeable to income tax. The individual stockholder will be treated as acquiring the ADS for a consideration equal to his or her market value at the time of the merger for capital gains tax purposes.

Corporation Tax

At the effective time of the merger, a corporate stockholder of Rowan Delaware that is resident in the U.K. will be treated as disposing of its stock of Rowan Delaware for a consideration equal to the market value of the stock at that time, which may, depending on the stockholder’s individual circumstances, give rise to a chargeable gain or an allowable loss for the purposes of corporation tax. A corporate stockholder that is not resident in the U.K. will not be liable for corporation tax on chargeable gains accruing on the disposal of its shares of common stock of Rowan Delaware unless it carries on a trade in the U.K. through a permanent establishment in the U.K. and the stock was acquired, used in or for the purposes of the permanent establishment or used in or for the purposes of the trade carried on by the stockholder through the permanent establishment. In these circumstances, the non-U.K. resident holder of the shares of common stock of Rowan Delaware may, depending on its individual circumstances, be chargeable to corporation tax on chargeable gains arising from a disposal of its shares of common stock of Rowan Delaware. The merger should not be treated as giving rise to a distribution which will be chargeable to corporation tax.

The full rate of corporation tax on chargeable gains for the financial years 2011 and 2012 is 26 percent and 25 percent, respectively, although small companies may be entitled to claim the small companies rate of tax, in

 

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which case chargeable gains will be subject to corporation tax at rates of between 20 percent and 26 percent (or 25 percent). A corporate stockholder of Rowan Delaware will be entitled to an indexation allowance in computing the amount of a chargeable gain accruing on the disposal of its shares of common stock of Rowan Delaware, which will provide relief for the effects of inflation by references to movements in the U.K. retail price index. If the conditions of the substantial shareholding exemption set out in s.192A and Schedule 7AC of the Taxation of Chargeable Gains Act 1992 are satisfied in relation to a chargeable gain accruing to a corporate holder of shares of common stock of Rowan Delaware, the chargeable gain will be exempt from corporation tax. The conditions of the substantial shareholding exemption which must be satisfied will depend on the individual circumstances of the corporate stockholder. One of the conditions of the substantial shareholding exemption which must be satisfied is that the stockholder must have held a substantial shareholding in Rowan Delaware throughout a 12-month period beginning not more than two years before the day on which the disposal takes place. Ordinarily, a corporate stockholder will not be regarded as holding a substantial shareholding in Rowan Delaware unless it (whether alone or together with other group companies) holds not less than 10 percent of Rowan Delaware’s ordinary share capital. The corporate stockholder will be treated as acquiring the ADS for a consideration equal to their market value at the effective time of the merger for corporation tax purposes.

Taxation of Dividends

Withholding Tax

Dividends paid by Rowan UK will not be subject to any withholding or deduction for or on account of U.K. tax, irrespective of the residence or the individual circumstances of the ADS Holders.

Income Tax

An individual ADS Holder who is resident or ordinarily resident in the U.K. may, depending on his or her individual circumstances, be subject to income tax on dividends received from Rowan UK. An individual ADS Holder who is not resident or ordinarily resident in the U.K. will not be chargeable to income tax on dividends received from Rowan UK, unless the ADS Holder carries on (whether solely or in partnership) any trade, profession or vocation through a branch or agency in the U.K. and the ADS are used by or held by or for that branch or agency. In these circumstances, the non-U.K. resident ADS Holder may, depending on his or her individual circumstances, be chargeable to income tax on dividends received from Rowan UK.

The rate of income tax which is chargeable on dividends received by higher rate and additional rate taxpayers in the tax year 2011/2012 is 32.5 percent and 42.5 percent, respectively (the additional rate applies to individuals whose total income chargeable to income tax exceeds £150,000 and their dividend income is treated as the top slice of their total income which is chargeable to income tax). Individual ADS Holders who are resident in the U.K. will be entitled to a tax credit equal to one-ninth of the amount of the dividend received from Rowan UK, which will be taken into account in computing the gross amount of the dividend which is chargeable to income tax. The tax credit will be credited against the ADS Holder’s liability (if any) to income tax on the gross amount of the dividend. An individual ADS Holder who is not subject to income tax on dividends received from Rowan UK will not be entitled to claim payment of the tax credit in respect of such dividends. The right of an individual ADS Holder who is not resident in the U.K. to a tax credit will depend on his or her individual circumstances.

Corporation Tax

Unless an exemption is available as discussed below, a corporate ADS Holder that is resident in the U.K. will be subject to corporation tax on dividends received from Rowan UK. A corporate ADS Holder that is not resident in the U.K. will not be subject to corporation tax on dividends received from Rowan UK unless the ADS Holder carries on a trade in the U.K. through a permanent establishment in the U.K. and the dividends form part of the profits of a trade carried on through or from the permanent establishment or the ADS are used by, for or

 

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held by or for, the permanent establishment. In these circumstances, the non-U.K. resident corporate ADS Holder may, depending on its individual circumstances and if the exemption discussed below is not available, be chargeable to corporation tax on dividends received from Rowan UK.

The full rate of corporation tax chargeable on dividends received from Rowan UK in financial years 2011 and 2012 is 26 percent and 25 percent, respectively, although smaller companies may be entitled to claim the small companies rate of corporation tax which is 20 percent for financial year 2011. If dividends paid by Rowan UK fall within an exemption from corporation tax set out in Part 9A of the Corporation Tax Act 2009, the receipt of the dividend by a corporate ADS Holder will be exempt from corporation tax. Generally, the conditions for exemption from corporation tax on dividends paid by Rowan UK should be satisfied, although the conditions which must be satisfied in any particular case will depend on the individual circumstances of the corporate ADS Holders.

ADS Holders that are regarded as small companies should generally be exempt from corporation tax on dividends received from Rowan UK, unless the dividends are made as part of a tax advantage scheme. ADS Holders that are not regarded as small companies should generally be exempt from corporation tax on dividends received from Rowan UK on the basis that the Class A Ordinary Shares underlying the ADS should be regarded as non-redeemable ordinary shares. Alternatively, ADS Holders that are not small companies should also generally be exempt from corporation tax on dividends received from Rowan UK if they hold ADS which represent less than 10 percent of the issued share capital of Rowan UK, would be entitled to less than 10 percent of the profits available for distribution to holders of the issued share capital of Rowan UK and would be entitled on a winding up to less than 10 percent of the assets of Rowan UK available for distribution to holders of its issued share capital. In certain limited circumstances, the exemption from corporation tax will not apply to such ADS Holders if a dividend is made as part of a scheme which has a main purpose of falling within the exemption from corporation tax.

Taxation of Capital Gains

Capital Gains Tax

A disposal of ADS by an individual ADS Holder who is resident or ordinarily resident in the U.K. may, depending on his or her individual circumstances, give rise to a chargeable gain or an allowable loss for the purposes of capital gains tax. An individual ADS Holder who temporarily ceases to be resident or ordinarily resident in the U.K. for a period of less than five years and who disposes of his or her ADS during that period of temporary non-residence may be liable to capital gains tax on a chargeable gain accruing on the disposal on his or her return to the U.K. under certain anti-avoidance rules. An individual ADS Holder who is neither resident nor ordinarily resident in the U.K. will not be chargeable to capital gains tax on capital gains arising on the disposal of their ADS unless the ADS Holder carries on a trade, profession or vocation in the U.K. through a branch or agency in the U.K. and the ADS were acquired, used in or for the purposes of the branch or agency or used in or for the purposes of the trade, profession or vocation carried on by the ADS Holder through the branch or agency. In these circumstances, the non-U.K. resident ADS Holder may, depending on his or her individual circumstances, be chargeable to capital gains tax on chargeable gains arising from a disposal of their ADS. For the tax year 2011/2012, the rate of capital gains tax on chargeable gains is 18 percent or 28 percent (or at a combination of the two rates) depending, broadly, on whether the individual ADS Holder is liable to income tax at the basic or higher/additional rate.

Corporation Tax

A disposal of ADS by a corporate ADS Holder that is resident in the U.K. may give rise to a chargeable gain or an allowable loss for the purposes of corporation tax. A corporate ADS Holder that is not resident in the U.K. will not be liable for corporation tax on chargeable gains accruing on the disposal of its ADS unless it carries on a trade in the U.K. through a permanent establishment in the U.K. and the ADS were acquired, used in or for the purposes of the permanent establishment or used in or for the purposes of the trade carried on by the ADS Holder

 

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through the permanent establishment. In these circumstances, the non-U.K. resident ADS Holder may, depending on its individual circumstances, be chargeable to corporation tax on chargeable gains arising from a disposal of its ADS.

The full rate of corporation tax on chargeable gains in financial years 2011 and 2012 is 26 percent and 25 percent, respectively, although small companies may be entitled to claim the small company’s rate of tax. Corporate ADS Holders will be entitled to an indexation allowance in computing the amount of a chargeable gain accruing on a disposal of the ADS, which will provide relief for the effects of inflation by reference to movements in the U.K. retail price index. If the conditions of the substantial shareholding exemption set out in s.192A and Schedule 7AC of the Taxation of Chargeable Gains Act 1992 are satisfied in relation to a chargeable gain accruing to a corporate ADS Holder, the chargeable gain will be exempt from corporation tax. The conditions of the substantial shareholding exemption which must be satisfied will depend on the individual circumstances of the corporate ADS Holder. One of the conditions of the substantial shareholding exemption which must be satisfied is that the corporate ADS Holder must have held a substantial shareholding in Rowan UK throughout a 12-month period beginning not more than two years before the day on which the disposal takes place. Ordinarily, a corporate ADS Holder will not be regarded as holding a substantial shareholding in Rowan UK unless it (whether alone, or together with other group companies) directly holds not less than 10 percent of Rowan UK’s ordinary share capital (not represented by ADRs).

Stamp Duty and Stamp Duty Reserve Tax

The discussion below relates to holders of Class A Ordinary Shares or ADS wherever resident (but not to holders such as market makers, brokers, dealers and intermediaries, to whom special rules apply).

Transfer of Class A Ordinary Shares and Uncertificated ADS

Provided that any instrument of transfer is not executed in the U.K. and remains at all times outside the U.K. and the transfer does not relate to any matter or thing done or to be done in the U.K., no stamp duty is payable on the acquisition or transfer of (i) Class A Ordinary Shares not represented by ADS and (ii) uncertificated ADS (i.e., not evidenced by ADRs) held in a direct registration system. ADS held in book-entry form on the facilities of The Depository Trust Company are not considered to be in a direct registration system. However, an unconditional agreement for such transfer, or a conditional agreement which subsequently becomes unconditional, will be liable to stamp duty reserve tax, or “SDRT,” generally at the rate of 0.5 percent of the consideration for the transfer; but such liability will be cancelled if the agreement is completed by a duly stamped instrument of transfer within six years of the date of the agreement, or if the agreement was conditional, the date the agreement became unconditional. Where stamp duty is paid, any SDRT previously paid will be repaid on the making of an appropriate claim. Stamp duty and SDRT are normally paid by the purchaser.

Transfer of ADS Evidenced by ADRs

No stamp duty need, in practice, be paid on the acquisition or transfer of ADS evidenced by ADRs provided that any instrument of transfer or contract for sale is not executed in the U.K. and remains at all times outside the U.K. and the transfer does not relate to any matter or thing done or to be done in the U.K. An agreement for the transfer of ADS evidenced by ADRs will not give rise to a SDRT liability.

THE U.K. TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACH ROWAN DELAWARE STOCKHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE PARTICULAR U.K. TAX CONSEQUENCES THAT MAY APPLY TO SUCH STOCKHOLDER.

Material U.K. Tax Considerations Relating to and After the Merger

The following paragraphs are intended to be a general summary of certain material U.K. tax consequences relating to the merger based on current U.K. law relating to corporation tax, stamp duty and stamp duty reserve

 

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tax and on Rowan Delaware’s understanding of the current administrative policies and practices of HMRC published in writing prior to the date hereof. This summary, and all other statements, do not otherwise take into account or anticipate any changes in law or practice, whether legislative, governmental or judicial decision or action, which could possibly be made effective on a retroactive basis. This summary does not address all U.K. corporation tax, stamp duty or stamp duty reserve tax consequences that may be relevant to Rowan Delaware, Rowan UK or any of their subsidiaries, and is not intended to be, nor should it be construed to be, legal or tax advice to any person.

The Merger

We anticipate that none of Rowan Delaware, Rowan UK or any of their subsidiaries will incur U.K. corporation tax as a result of completion of the merger.

Subject to certain exemptions, a charge to stamp duty or SDRT generally arises under U.K. law on the issue, transfer or appropriation of shares of companies incorporated in the U.K. to the issuer of depositary receipts, its nominee or agent. Such stamp duty or SDRT is payable by the issuer of the depositary receipts. The rate of such stamp duty or SDRT is generally 1.5 percent of either (i) in the case of an issue of shares, the issue price of the shares concerned, (ii) in the case of a transfer of shares, the amount or value of the consideration for the transfer, or (iii) in the case of an appropriation of shares, the value of the shares concerned. However, in view of the judgment of the European Court of Justice in HSBC Holdings plc, Vidacos Nominees Ltd v HMRC Case C-569/07 given on October 1, 2009, such charge to stamp duty or SDRT may be prohibited by Council Directive 69/335/EEC of July 17, 1969 concerning indirect taxes on the raising of capital (as amended).

Following the HSBC Holdings case, HMRC announced that it will not seek to apply 1.5 percent stamp duty or SDRT when new shares of companies incorporated in the U.K. are first issued into an EU clearance service or depositary receipt system. Accordingly, with respect to the issue of Class A Ordinary Shares to the depositary in New York on December 5, 2011, SDRT at the rate of 1.5 percent on the issue price of the Class A Ordinary Shares has been paid by Rowan Delaware on behalf of the depositary on the basis that all rights to claim repayment of the SDRT are reserved. Any claim for payment of overpaid SDRT, based on the HSBC Holdings judgment or otherwise, must be submitted to HMRC within four years after the date on which the SDRT was paid.

After the Merger

General

Subject to any available exemptions or other forms of relief, a U.K. resident company, such as Rowan UK, is subject to corporation tax on its worldwide income profits and chargeable gains. The current rate of corporation tax (except for small companies and in respect of certain offshore oil and gas extraction activities) is 26 percent.

Dividend Exemption

A U.K. resident company, such as Rowan UK, is exempt from corporation tax in respect of certain broad classes of dividend or other distributions (except of a capital nature) received from companies, whether they are resident in the U.K. or overseas, including dividends or other distributions from controlled companies and in respect of non-redeemable ordinary shareholdings.

Substantial Shareholding Exemption

A U.K. resident company, such as Rowan UK, which is a shareholder of a trading group is also exempt from corporation tax in respect of capital gains arising from the actual or deemed disposal of qualifying shareholdings in qualifying companies, whether they are resident in the U.K. or elsewhere. For this purpose, a capital distribution is treated as deemed disposal of the shares of the distributing company.

 

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Controlled Foreign Companies

Subject to certain exemptions and other forms of relief, a U.K. resident company, such as Rowan UK, is liable to corporation tax on the income profits (whether or not distributed) of any controlled company which is resident in a foreign jurisdiction and is subject to a lower level of taxation on those profits. A controlled company will be regarded as being subject to a lower level of taxation if the amount of foreign income tax on its profits is less than three-quarters of the corresponding corporation tax that would be payable in the U.K. if the company were resident in the U.K. Any such foreign income tax on the profits of the controlled company is generally creditable for U.K. corporation tax purposes.

However, under rules enacted in 2011, and based on certain confirmations given in writing by HMRC, a temporary exemption from the above CFC legislation is expected to apply to Rowan UK, subject to certain limited conditions, until December 31, 2014. In June 2011, HM Treasury and HMRC published a joint consultation document with detailed proposals for wide-ranging reforms to the existing CFC legislation so that the new rules will apply, broadly, only where there is an artificial diversion of U.K. profits. The U.K. Government published revised proposals for the new CFC rules together with draft legislation on December 6, 2011 (further updated and revised on January 31, 2012), which was open to consultation until February 10, 2012. It is expected that the new CFC legislation will be enacted later in 2012. The effect of the new CFC rules on Rowan UK after the end of its temporary exemption period ending on December 31, 2014, will not be clear until the new legislation is enacted in its entirety. However, Rowan UK will monitor the proposed changes in order to address and seek to mitigate their effects (if any) and the Board does not consider that the U.K. Government’s objectives in reforming the CFC legislation should lead to Rowan UK being significantly disadvantaged.

 

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DESCRIPTION OF CLASS A ORDINARY SHARES OF ROWAN UK

General

The following information is a summary of the material terms of the Class A Ordinary Shares, nominal value US$0.125 per share, as specified in the New Articles. You are encouraged to read the New Articles in the form attached to this proxy statement/prospectus as Annex B and which are substantially as are proposed to be adopted immediately prior to the consummation of the merger. See also “Description of American Depositary Shares of Rowan UK” and “Comparison of Rights of Stockholders/Shareholders.” If the mandatory offer proposal is not adopted, the New Articles will be the articles of association of Rowan UK, but omitting those provisions. If the declassification proposal is not adopted, the New Articles will be the articles of association of Rowan UK, but omitting those provisions.

Pursuant to the merger agreement, each outstanding share of common stock of Rowan Delaware will be converted on a one-for-one basis into the right to receive one ADS. Each ADS represents one Class A Ordinary Share. The deposit agreement among Rowan UK, Citibank and you governs the rights of holders of the ADS as described in “Description of American Depositary Shares of Rowan UK.”

All of the issued Class A Ordinary Shares are fully paid and not subject to any further calls or assessments by Rowan UK. There are no conversion rights, redemption provisions or sinking fund provisions relating to any Class A Ordinary Shares.

All Class A Ordinary Shares, including those underlying the ADS to be delivered in the merger, will be represented by certificates in registered form or in uncertificated form issued (subject to the terms of the issue of the shares) by Rowan UK’s registrar. Transactions in uncertificated Class A Ordinary Shares are to be settled in the CREST system, the computerized settlement system operated by Euroclear U.K. & Ireland Limited (formerly known as CRESTCo Limited) to facilitate the transfer of title to shares in uncertificated form. The settlement procedures for this system are described in the reference manual for CREST, which can be found on Euroclear U.K. & Ireland’s website at www.euroclear.com. Subject to certain restrictions under the New Articles, a shareholder may transfer some or all of his/her Class A Ordinary Shares in uncertificated form through CREST. Provisions of the New Articles do not apply to any uncertificated Class A Ordinary Shares to the extent that those provisions are inconsistent with the holding of shares in uncertificated form or with the transfer of shares through CREST.

Under English law, persons who are neither residents nor nationals of the U.K. may freely hold, vote and transfer the Rowan UK shares in the same manner and under the same terms as U.K. residents or nationals.

Share Capital

As of the date of this proxy statement/prospectus and on the date of adoption of the New Articles there are, and will be:

 

  (i) 50,000 Class B Ordinary Shares in issue; and

 

  (ii) 150,000,000 Class A Ordinary Shares in issue (all of which are and will continue to be represented by ADS).

Immediately prior to the consummation of the merger, the Rowan UK Board will be authorized to allot up to US$18,750,000 of aggregate nominal value of shares, which may consist of one or more classes of shares of Rowan UK that may be issued by the Rowan UK Board pursuant to a shareholder resolution that is intended to be passed prior to the consummation of the merger. The shares will be in such classes, including Class A Ordinary Shares, and have such rights as the Rowan UK Board shall determine at the time of allotment and issuance.

 

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The Class A Ordinary Shares and the Class B Ordinary Shares, or together the “Ordinary Shares,” will have the same rights and privileges in all respects. The issued Class B Ordinary Shares will remain in issue after the merger, but will have no voting rights or rights to dividends or distributions to the extent that they are held by Rowan Delaware.

Dividends

Subject to the Companies Act, the Rowan UK Board may declare a dividend to be paid to the shareholders according to their respective rights and interests in Rowan UK and may fix the time for payment of such dividend. The Rowan UK Board may from time to time declare and pay (on any class of shares of any amounts and in any currency) dividends on its issued share capital only out of its distributable profits. Under English law, “distributable profits” are a company’s accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made, calculated on a standalone basis. Distributable profits are determined in accordance with generally accepted accounting principles in the United Kingdom at the time the relevant accounts are prepared. Rowan UK will not be permitted to make a distribution if, at the time, the amount of its net assets is less than the aggregate of its called-up share capital and undistributable reserves or to the extent that the distribution will reduce the net assets below such amount. In connection with the merger, Rowan UK intends to take steps to create sufficient distributable reserves to permit dividends, distributions or share repurchases following the effective time of the merger. There are no fixed dates on which entitlement to dividends arise on any of the Ordinary Shares. The Rowan UK Board may direct the payment of all or any part of a dividend to be satisfied by distributing specific assets, in particular paid up shares or debentures of any other company. The New Articles also permit a scrip dividend scheme under which shareholders may be given the opportunity to elect to receive fully paid Ordinary Shares instead of cash with respect to all or part of future dividends.

To the extent that as a result of the merger any Class A Ordinary Shares held by the custodian are represented by ADS held by or for the benefit of any of Rowan UK’s subsidiaries, such as Rowan Delaware, the New Articles provide that such Class A Ordinary Shares will not be entitled to receive dividends or distributions, including any scrip dividends, bonus shares or dividends or distributions of property or debentures of any other company. Therefore, the holder of such ADS shall not be entitled to any such dividends or distributions while such ADS representing those Class A Ordinary Shares are held by or for the benefit of such subsidiaries.

If a shareholder owes any money to Rowan UK relating in any way to any class of Rowan UK shares, the Rowan UK Board may deduct any of this money from any dividend on any shares held by the shareholder, or from other money payable by Rowan UK in respect of the shares. Money deducted in this way may be used to pay the amount owed to Rowan UK.

Unclaimed dividends and other amounts payable by Rowan UK in respect of an Ordinary Share can be invested or otherwise used by directors for the benefit of Rowan UK until they are claimed under English law. A dividend or other money remaining unclaimed for a period of 12 years after it first became due for payment will be forfeited and cease to remain owed by Rowan UK.

Voting Rights

At a general meeting any resolutions put to a vote must be decided on a poll.

Subject to any rights or restrictions as to voting attached to any class of shares in accordance with the New Articles and subject to disenfranchisement, (i) in the event of non-payment of any call or other sum due and payable in respect of any shares not fully paid, (ii) in the event of any non-compliance with any statutory notice requiring disclosure of an interest in shares, or (iii) with respect to any shares held by any subsidiary of Rowan UK, every shareholder (other than Rowan Delaware or any other subsidiary of Rowan UK) who (being an individual) is present in person or (being a corporation) is present by a duly authorized corporate representative

 

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at a general meeting of the shareholders of Rowan UK will have one vote for every ADS of which such person is the holder, and every person present who has been appointed as a proxy shall have one vote for every share in respect of which such person is the proxy, except that any proxy who has been appointed by the depositary shall have such number of votes as equals the number of shares in relation to which such proxy has been appointed.

In the case of joint holders, the vote of the person whose name stands first in the register of shareholders and who tenders a vote, whether in person or by proxy, is accepted to the exclusion of any votes tendered by any other joint holders.

The necessary quorum for a general shareholder meeting is the shareholders who together represent at least the majority of the voting rights of all the shareholders entitled to vote present in person or by proxy (i.e., any shares whose voting rights have been disenfranchised, whether pursuant to the Companies Act and/or under the New Articles, shall be disregarded for the purposes of determining a quorum).

An annual general meeting shall be called by not less than 21 clear days’ notice and no more than 60 days’ notice. For all other general meetings except general meetings properly requisitioned by shareholders, such meetings shall be called by not less than 14 clear days’ notice and no more than 60 days’ notice. The notice of meeting must also specify a time by which a person must be entered on the register in order to have the right to attend or vote at the meeting. Under English law, so long as Class A Ordinary Shares are issued in uncertificated form or if the Class A Ordinary Shares are admitted to trading on a regulated market in the European Economic Area, that time must not be more than 48 hours before the time fixed for the meeting with no account being taken of any part of a day that is not a working day. In calculating the period mentioned, “clear days” means calendar days and excludes (i) the date a notice is given or a request received and (ii) the date of the meeting itself. The number of shares then registered in their respective names shall determine the number of votes a person is entitled to cast at that meeting.

An appointment of proxy (whether in hard copy form or electronic form, including via the Internet or by means of a telephonically communicated datagram, in accordance with the means as provided by Rowan UK) must be received by Rowan UK before the time or holding the meeting or adjourned meeting at which the person named in the appointment of proxy proposes to vote. In the case of a poll taken more than 48 hours after the meeting at which the relevant vote was to be taken, an appointment of proxy must be received after such meeting and not less than 24 hours (or such shorter time as the Rowan UK Board may determine) before the time appointed for taking the poll; or in the case of a poll not taken immediately but taken not more than 48 hours after the meeting, the appointment of proxy must be delivered at the meeting at which the poll is to be taken. An appointment of proxy not received or delivered in accordance with the New Articles is invalid under English law.

To the extent that as a result of the merger any Class A Ordinary Shares held by the custodian are represented by ADS held by or for the benefit of any of Rowan UK’s subsidiaries, including Rowan Delaware, then under the Companies Act such Class A Ordinary Shares will not have voting rights.

Return of Capital

In the event of a voluntary winding-up of Rowan UK, the liquidator may, on obtaining any sanction required by law, divide among the shareholders the whole or any part of the assets of Rowan UK, whether or not the assets consist of property of one kind or of different kinds.

The liquidator may also, with the same authority, transfer the whole or any part of the assets to trustees upon any trusts for the benefit of the shareholders as the liquidator decides. No past or present shareholder can be compelled to accept any asset which could subject him or her to a liability.

 

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Preemptive Rights and New Issues of Shares

Under Section 549 of the Companies Act, directors are, with certain exceptions, unable to allot securities without being authorized either by the shareholders in a general meeting or by the New Articles pursuant to Section 551 of the Companies Act. In addition, under the Companies Act, the issuance of equity securities that are to be paid for wholly in cash (except shares held under an employees’ share scheme) must be offered first to the existing equity shareholders in proportion to the respective nominal (i.e., par) values of their holdings on the same or more favorable terms, unless a special resolution (i.e., 75 percent of votes cast) to the contrary has been passed in a general meeting of shareholders or the articles of association otherwise provide an exclusion from this requirement (which exclusion can be for a maximum of five years after which shareholders approval would be required to renew the exclusion). In this context, equity securities generally means in relation to Rowan UK Class A Ordinary Shares (being shares other than shares which with respect to dividends or capital, carry a right to participate only up to a specified amount in a distribution) and all rights to subscribe for or convert securities into such shares.

A shareholder resolution proposed to be passed immediately prior to the consummation of the merger will authorize the Rowan UK Board (generally and unconditionally), for a period up to five years from the date on which the resolution is passed, to allot equity securities, or to grant rights to subscribe for or to convert or exchange any security, including convertible preference shares, convertible debt securities and exchangeable debt securities of a subsidiary, into shares of the Company, up to an aggregate nominal amount of US$18,750,000 and to exclude preemptive rights in respect of such issuances for the same period of time. Such authority will continue for five years and thereafter it must be renewed by a vote of the shareholders, but we may seek renewal for additional five year terms more frequently. Rowan UK may, before the expiration of any such authority, make an offer or agreement which would or might require Rowan UK shares to be allotted (or rights to be granted) after such expiration, and the Rowan UK Board may allot shares or grant rights in pursuance of such an offer or agreement as if the authority to allot had not expired.

Subject to the provisions of the Companies Act and to any rights attached to any existing shares, any Rowan UK shares may be issued with, or have attached to them, such rights or restrictions as the shareholders of Rowan UK may by ordinary resolution determine or, where the above authorizations are in place, the Rowan UK Board may determine such rights or restrictions.

The Companies Act prohibits an English company from issuing shares for no consideration, including with respect to ADS to be issued pursuant to stock appreciation rights, restricted stock and restricted stock units granted under the equity incentive plans. Accordingly, the nominal value of the shares underlying any ADS issued pursuant to any such award or any other share-based award granted under the equity incentive plans must be paid pursuant to the Companies Act. These restrictions, however, will not apply to ADS previously issued for which the nominal value of the shares underlying such ADS have been previously paid. We anticipate that sufficient ADS have been issued and contributed to Rowan Mergeco such that, following the merger, existing holders of equity awards will not be required to pay the nominal or par value to receive the ADS upon exercise or settlement of the award.

Disclosure of Interests in Shares

Section 793 of the Companies Act provides Rowan UK the power to require persons whom it knows has, or whom it has reasonable cause to believe has, or within the previous three years has had, any ownership interest in any shares (which we refer to as the “default shares”) to disclose prescribed particulars of those shares. For this purpose, “default shares” includes any shares allotted or issued after the date of the Section 793 notice in respect of those shares. Failure to provide the information requested within the prescribed period after the date of sending the notice will result in sanctions being imposed against the holder of the default shares as provided within the Companies Act.

 

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Under the New Articles, Rowan UK will also withdraw voting and certain other rights, place restrictions on the rights to receive dividends and transfer default shares if the relevant holder of default shares has failed to provide the information requested within 14 days after the date of sending the notice, depending on the level of the relevant shareholding (and unless the Rowan UK Board decides otherwise).

Alteration of Share Capital/Repurchase of Shares

Rowan UK may from time to time by ordinary resolution of its shareholders:

 

   

increase its share capital by allotting new shares in accordance with the authority contained in the shareholder resolution referred to above and the New Articles;

 

   

consolidate and divide all or any of its share capital into shares of a larger nominal amount than the existing shares; and

 

   

subdivide any of its shares into shares of a smaller nominal amount than its existing shares.

Subject to the Companies Act and to any rights the holders of any Rowan UK shares may have, Rowan UK may purchase any of its own shares of any class (including any redeemable shares, if the Rowan UK Board should decide to issue any) by way of “off market purchases” with the prior approval of shareholders by special resolution (i.e., 75 percent of votes cast). Such approval may last for up to five years from the date of the special resolution, and renewal of such approval for additional five year terms may be sought more frequently. The New Articles provide that, if another class of shares is in issue with the right to vote to approve Class A Ordinary Share repurchase agreements by way of “off market purchases,” the holders of Class A Ordinary Shares will not have the right to vote such shares with respect to such special resolution, and would not have the right to receive notice of or attend any meeting whose sole business is to approve such special resolution. As the Class B Ordinary Shares will be held by a subsidiary of Rowan UK immediately following the effective time of the merger, they will not be able to vote on special resolutions to approve such “off market purchases” of Class A Ordinary Shares, but they would have such rights if they were subsequently transferred to a person other than a subsidiary of Rowan UK. Further, under the New Articles, the Board may allot and issue additional classes of shares with rights to vote on special resolutions to approve Class A Ordinary Share repurchase agreements by way of “off market purchases.” This potential disapplication of certain limited rights of the Class A Ordinary Shares would expire at least every five years unless extended by a special resolution of the shareholders. A special resolution, which would authorize the repurchase of up to 30 percent per annum of the issued share capital as of the beginning of each fiscal year, is anticipated to be adopted prior to the effective time of the merger. Shares may only be repurchased out of distributable profits or the proceeds of a fresh issue of shares made for that purpose and, if a premium is paid, it must be paid out of distributable profits.

Transfer of Shares

The New Articles allow shareholders to transfer all or any of their certificated shares by instrument of transfer in writing in any usual form or in any other form which is permitted by the Companies Act and is approved by the Rowan UK Board. The instrument of transfer must be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid) by or on behalf of the transferee and must be delivered to the registered office or any other place the Rowan UK Board decides.

The Rowan UK Board may refuse to register a transfer:

 

  (1) if the shares in question are not fully paid;

 

  (2) if it is with respect to more than one class of shares;

 

  (3) if it is with respect to shares on which Rowan UK has a lien;

 

  (4) if it is in favor of more than four persons jointly;

 

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  (5) if it is not duly stamped (if such a stamp is required);

 

  (6) if it is not presented for registration together with the share certificate and evidence of title as the Rowan UK Board reasonably requires; or

 

  (7) in certain circumstances, if the holder has failed to provide the required particulars to Rowan UK as described under “— Disclosure of Interests in Shares” above.

If the Rowan UK Board refuses to register a transfer of a share, it shall, within two months after the date on which the transfer was lodged with Rowan UK, send to the transferee notice of the refusal together with its reasons for refusal.

General Meetings and Notices

The notice of a general meeting shall be provided to the shareholders (other than any who, under the provisions of the New Articles or the terms of allotment or issue of shares, are not entitled to receive notice), to the Rowan UK Board and to the auditors. Holders of ADS are entitled to receive notices under the terms of the deposit agreement relating to ADS. See “Description of American Depositary Shares of Rowan UK — Voting Rights.”

Under English law, Rowan UK is required to hold an annual general meeting of shareholders within six months from the day following the end of its fiscal year and, subject to the foregoing, the meeting may be held at a time and place determined by the Rowan UK Board.

Mandatory Offers

Although Rowan UK will not be subject to the Takeover Code immediately following the redomestication, the Board recognizes the importance of the mandatory offer provisions and certain other Takeover Code protections afforded to shareholders of U.K. public companies that are mandatorily subject to the Takeover Code. The Board has recommended that the New Articles include some similar protections. These provisions are summarized below and seek to regulate certain acquisitions of interests in the shares of Rowan UK but do in some respects differ from the terms of the analogous protection under the Takeover Code. These provisions do not, however, provide all of the protections provided by the Takeover Code as the Board does not believe all provisions of the Takeover Code would be of benefit to the Rowan UK shareholders.

Under the proposed provisions, which are intended to be similar to Rule 9 of the Takeover Code (except as described below), a person must not:

 

  (i) whether by a series of transactions over a period of time or not, acquire an interest in shares which (taken together with shares in which persons determined by the Rowan UK Board to be acting in concert with him or her are interested) carry 30 percent or more of the voting rights of Rowan UK; or

 

  (ii) while he or she (together with persons determined by the Rowan UK Board to be acting in concert with him or her), is interested in shares which in aggregate carry not less than 30 percent but not more than 50 percent of the voting rights of Rowan UK, acquire, whether by himself or herself or with persons determined by the Rowan UK Board to be acting in concert with him or her, an interest in any other shares that (taken together with any interests in shares held by persons determined by the Rowan UK Board to be acting in concert with him or her), increases the percentage of shares carrying voting rights in which he or she is interested,

except, in either case:

 

  (1)

with the consent of the Rowan UK Board, pursuant to an offer recommended by the Rowan UK Board or with the prior approval of the shareholders of Rowan UK (other than: (a) the acquirer and persons acting in concert with him or her; or (b) persons from whom the acquirer (together with persons

 

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  determined by the Rowan UK Board to be acting in concert with him or her) has agreed to acquire shares or has otherwise obtained an irrevocable commitment in relation to the acquisition of shares by the acquirer or any persons determined by the Rowan UK Board to be acting in concert with him or her); or

 

  (2) where the acquisition is made in breach of either limit described in (i) or (ii) above as a result of a tender offer for all of the issued and outstanding shares of Rowan UK that is in cash (or accompanied by a cash alternative) and otherwise in accordance with the Takeover Code; or

 

  (3) where the acquisition is made pursuant to a single transaction which causes a breach of either limit described in (i) or (ii) above otherwise than as a result of a tender offer (for example, by an open market purchase) and the acquirer makes and implements a mandatory offer to all other shareholders of Rowan UK on the basis described below (provided that, subject to certain exceptions, no further acquisitions are made by the acquirer other than pursuant to such a mandatory offer).

Where a mandatory offer is required under the New Articles for the acquirer to avail itself of the exception in (3), such mandatory offer must be made and implemented in accordance with the rules applicable to mandatory offers under the Takeover Code (as if the Takeover Code applied to Rowan UK). In particular, it must be unconditional (other than as to acceptances), be in cash (or accompanied by a cash alternative) and be at the highest price paid by such person required to make the mandatory offer (or any other person acting in concert with such person) for any interest in shares in Rowan UK during the previous 12 months. Such a mandatory offer must be made within 7 days of breaching either limit described in (i) or (ii) above, which is a shorter time period than would normally apply under the analogous provisions of the Takeover Code.

The exemption from breaching either limit described in (i) or (ii) (as described in (2) above) is narrower than the analogous exemption in the Takeover Code because under the Takeover Code acquisitions pursuant to non-cash and partial offers may also be exempt. This potentially provides the Rowan UK Board with greater power to defend a hostile non-cash or partial tender offer than would otherwise be available under the Takeover Code.

As set out in Article 147 of the New Articles, if approved, the Rowan UK Board would have various powers (the exercise of which will be subject to their fiduciary duties) to enforce these provisions (including disenfranchisement (as regards voting and entitlement to distributions) and refusal to register the transfer of shares).

The Rowan UK Board will have the full authority to determine the application of these provisions in the New Articles, including the deemed application of any relevant parts of the Takeover Code and such authority will include all the discretion that the UK Panel on Takeovers and Mergers would exercise if the Takeover Code applied to Rowan UK. The Rowan UK Board will not be required to give any reason for any decision or determination it makes.

Squeeze-out & Sell-out Provisions

Squeeze-out

Under the Companies Act, if an offeror were to acquire or unconditionally contract to acquire 90 percent of the shares to which the offer relates and 90 percent of the voting rights attached to those shares, then, within three months of the last day on which its offer can be accepted, it could compulsorily acquire the remaining 10 percent. It would do so by sending a notice to outstanding shareholders telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the issued shares in its favor and pay the consideration to Rowan UK, which would hold the consideration in trust for outstanding shareholders. The consideration offered to the shareholders whose shares are compulsorily acquired must, in general, be the same as the consideration that was available under the takeover offer.

 

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Sell-out

The Companies Act would also provide Rowan UK’s minority shareholders a right to be bought out in certain circumstances by an offeror who had made a takeover offer. If at any time before the end of the period within which a takeover offer could be accepted (as set forth in such offer), the offeror holds or has unconditionally contracted to acquire with or without any other shares in Rowan UK that the offeror has acquired or contracted to acquire (i) not less than 90 percent in value of all the voting shares in Rowan UK and (ii) shares that carry not less than 90 percent of the voting rights in Rowan UK, then any holder of shares to which the offer related who had not accepted the offer could, by a written communication to the offeror, require the offeror to acquire those shares. The offeror would be required to provide any Rowan UK shareholder notice of his right to be bought out within one month of that right arising. Sell-out rights cannot be exercised after the end of the period of three months from the last date on which the offer can be accepted or, if later, three months from the date on which the notice is served on the Rowan UK shareholders notifying them of their sell-out rights. If a shareholder of Rowan UK exercises its rights, the offeror is bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.

Liability of Rowan UK and its Directors and Officers

The New Articles provide that English courts have exclusive jurisdiction with respect to any suits brought by shareholders against Rowan UK or its directors. See “Comparison of Rights of Stockholders/Shareholders — Liability of Directors and Officers” for a discussion of the inability of an English company to exempt directors and officers from certain liabilities.

Anti-takeover Provisions

While the merger is not intended to implement any anti-takeover provisions, the level of anti-takeover provisions with respect to Rowan UK will differ from that with respect to Rowan Delaware by virtue of the differences between the DGCL and the Companies Act, the differences between the certificate of incorporation and bylaws of Rowan Delaware and the New Articles of Rowan UK and the differences between the rights of holders of shares of common stock of Rowan Delaware, the rights of holders of Rowan UK Class A Ordinary Shares, and the terms and conditions related to the ADS representing Class A Ordinary Shares as described in the deposit agreement. The provisions summarized below do not include those provisions resulting from the Companies Act. The provisions of the New Articles summarized below may have the effect of discouraging, delaying or preventing hostile takeovers, including those that might result in a premium being paid over the market price of Class A Ordinary Shares or ADS, as applicable, and discouraging, delaying or preventing changes in control or management of Rowan UK.

Takeover offers and certain other transactions in respect of certain public companies are regulated by the Takeover Code, which is administered by the Takeover Panel, a body consisting of representatives of the City of London financial and professional institutions which oversees the conduct of takeovers. An English public limited company is potentially subject to the Takeover Code if, among other factors, its central place of management and control is within the U.K., the Channel Islands or the Isle of Man. The Takeover Panel will generally look to the residency of a company’s directors to determine where it is centrally managed and controlled. The Takeover Panel has confirmed that, based upon Rowan UK’s current and intended plans for its directors and management and, for purposes of the Takeover Code, Rowan UK will be considered to have its place of central management and control outside the U.K., the Channel Islands or the Isle of Man. Therefore, the Takeover Code would not apply to Rowan UK. It is possible that in the future circumstances could change that may cause the Takeover Code to apply to Rowan UK.

Classified Board of Directors

Unless the declassification proposal is adopted, the Rowan UK Board, like our Board, will be divided into three classes, with the members of each class serving for staggered three-year terms. As a result, only one class

 

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of directors will be elected at each annual general meeting of shareholders, with the other classes continuing for the remainder of their respective three-year terms. If the declassification proposal is approved, directors, including directors elected to a three-year term at the general meeting scheduled for 2012, and any replacement for any such director, would initially continue to serve the remainder of their elected three-year terms. The directors elected at the 2013 annual general meeting (and each annual general meeting thereafter) will be elected for one-year terms, and beginning with the 2015 annual general meeting, the entire Board will be elected annually. Under English law, shareholders have no cumulative voting rights. In addition, the New Articles incorporate similar provisions to those contained in Rowan Delaware’s certificate of incorporation and bylaws, which regulate shareholders’ ability to nominate directors for election, subject to a five percent share ownership requirement as provided under the Companies Act. Although shareholders have the ability to remove a director without cause under English law, the classification of the Rowan UK Board, the lack of cumulative voting and the limitations on shareholders’ powers to nominate directors may have the effect of making it more difficult not only for any party to obtain control of Rowan UK by replacing the majority of the Rowan UK Board but also to force an immediate change in the composition of the Rowan UK Board. However, under the New Articles, if the shareholders remove the entire board, a shareholder may then convene a general meeting for the purpose of appointing directors. It should be noted that holders of ADS may have to surrender their ADS and withdraw their Class A Ordinary Shares in order to exercise their rights to nominate and remove directors.

Issuance of Additional Shares

The Rowan UK Board will have the authority, without further action of its shareholders for a period of five years, but subject to its statutory and fiduciary duties, to allot shares of Rowan UK or to grant rights to subscribe for or to convert or exchange any security, including convertible preference shares, convertible debt securities and exchangeable debt securities of a subsidiary, into shares of Rowan UK up to an aggregate nominal amount of US$18,750,000 and to exclude preemptive rights in respect of such issuances for the same period of time. Such authority will continue for five years and thereafter it must be renewed by a vote of the shareholders, but we may seek renewal for additional five year terms more frequently. The issuance of additional shares on various terms could adversely affect the holders of Class A Ordinary Shares or ADS. The potential issuance of additional shares may discourage bids for Class A Ordinary Shares or ADS at a premium over the market price, may adversely affect the market price of ADS and may discourage, delay or prevent a change of control of Rowan UK.

Shareholder Rights Plan

The Rowan UK Board will have the necessary corporate authority, without further action of its shareholders for a period of five years, but subject to its statutory and fiduciary duties, to give effect to a shareholder rights plan and to fix the terms thereof. Under a shareholder rights plan, subscription rights to acquire newly issued shares in Rowan UK would be issued to all shareholders. The exercise of these subscription rights would not be dependent on Rowan UK having a need for new capital. The newly issued shares may be of any class and so may have rights equal to or in priority to the Class A Ordinary Shares. After a person acquired beneficial ownership of a specified percentage (typically 20 percent) of the outstanding shares of Rowan UK, the rights would become exercisable by all holders thereof (other than the acquiring person and any affiliated or associated persons of it). Each such holder of a right would, upon the right becoming exercisable, have the right to receive upon exercise shares with a market value greater than the exercise price. As a result, such a plan could make it more difficult for another party to obtain control of Rowan UK by threatening to dilute a potential acquirer’s ownership interest in the company under certain circumstances.

The Rowan UK Board may adopt a shareholder rights plan at any time, including in conjunction with the consummation of the merger or sometime thereafter. Rowan Delaware currently has the authority to adopt a shareholder rights plan under Delaware law. The Rowan UK Board will have the authority without reference to its shareholders, but subject to its statutory and fiduciary duties, to determine whether or not to redeem the subscription rights granted under a shareholder rights plan. See “Comparison of Rights of Stockholders/Shareholders — Anti-takeover Matters.”

 

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The protections described under “Providing shareholders with certain protections similar to those of the U.K. Takeover Code” and other provisions of the New Articles, as well as any adoption of a shareholder rights plan, could discourage potential acquisition proposals and could delay or prevent a change in control. However, these provisions are intended to enhance shareholder value by discouraging hostile takeover tactics. For example, a shareholder rights plan could be used to improve the likelihood that (i) any process which may result in an acquisition or change of control is conducted in an orderly manner, including by providing additional time to negotiate with additional bidders or pursue alternative strategies; (ii) all shareholders are treated equally and fairly and in a similar manner; (iii) the success of the company is promoted for the benefit of its shareholders as a whole; (iv) the long term interests of the company, its employees, its shareholders and its business would be safeguarded, and/or (v) the company would not suffer serious economic harm. Moreover, the Rowan UK Board could use a shareholder rights plan to prevent the consummation of a hostile offer that the board believed undervalued the company or was otherwise not in the long term interests of shareholders.

It should be noted that these provisions potentially provide the Rowan UK Board with greater power to defend a hostile tender offer (or the acquisition of a significant interest in Rowan UK) than would otherwise be available under the Takeover Code and could have the effect of discouraging tender offers for Class A Ordinary Shares or ADS and, as a consequence, may adversely affect the market price of the Class A Ordinary Shares or ADS or inhibit fluctuations in the market price of Class A Ordinary Shares or ADS that could otherwise result from actual or rumored takeover attempts.

Mandatory Offer Provisions

Although not intended to be an anti-takeover provision, the mandatory offer provisions could have the effect of discouraging, delaying or preventing tender offers that are not all-cash or are for less than all of the issued and outstanding shares unless they have the consent of the Rowan UK Board or the prior approval of the shareholders of Rowan UK, including tender offers that might result in a premium being paid over the market price of Class A Ordinary Shares or ADS, as applicable, and discouraging, delaying or preventing changes in control or management of Rowan UK. See “Proposal 2 — Approval of Mandatory Offer Provisions In Rowan UK’s Articles of Association — Providing Shareholders with Certain Protections Similar to those of the U.K. Takeover Code.”

 

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES OF ROWAN UK

Citibank has agreed to act as the depositary for the ADS evidencing the Class A Ordinary Shares. Citibank’s depositary offices are located at 388 Greenwich Street, New York, New York 10013. ADS represent ownership interests in securities that are on deposit with the depositary. ADS are normally evidenced by ADRs. The depositary typically appoints a custodian to safekeep the securities on deposit. In this case, the current custodian is Citibank, N.A. (London Branch), located at 25 Molesworth Street Lewisham, London SE137EX.

We have appointed Citibank as depositary pursuant to a deposit agreement. A copy of the deposit agreement is on file with the SEC under cover of a Registration Statement on Form F-6. You may obtain a copy of the deposit agreement from the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 and from the SEC’s website at www.sec.gov.

We are providing a summary description of the material terms of the ADS and of your material rights as an owner of ADS. This summary does not describe all aspects of the deposit agreement, but we believe it is accurate in all material respects. The rights and obligations of an owner of ADS will be determined by reference to the actual terms of the deposit agreement and not by this summary. We urge you to review the deposit agreement in its entirety.

Subject to the terms and conditions of the deposit agreement and the applicable ADR, each ADS represents the right to receive one Class A Ordinary Share of Rowan UK on deposit with the custodian. An ADS also represents the right to receive any other property received by the depositary or the custodian on behalf of the owner of the ADS but that has not been distributed to the owners of ADS because of legal restrictions or practical considerations.

If you become an owner of ADS, you will become a party to the deposit agreement and therefore will be bound by its terms and by the terms of any ADR that evidences your ADS. The deposit agreement and the ADR specify our rights and obligations as well as your rights and obligations as owner of ADS and those of the depositary. As an ADS holder you appoint the depositary to act on your behalf in certain circumstances. The deposit agreement and the ADRs are governed by New York law. However, our obligations to the holders of Class A Ordinary Shares will continue to be governed by English law.

As an owner of ADS, you may hold your ADS either by means of one or more ADRs registered in your name, through a brokerage, safekeeping or other custodial account, or through an account established by the depositary in your name reflecting the registration of uncertificated ADS directly on the books of the depositary (commonly referred to as the “direct registration system” or “DRS”). The direct registration system reflects the uncertificated (book-entry) registration of ownership of ADS by the depositary. Under the direct registration system, ownership of ADS is evidenced by periodic statements issued by the depositary to the holders of the ADS. The direct registration system includes automated transfers between the depositary and DTC, the central book-entry clearing and settlement system for equity securities in the U.S. Transfers of uncertificated ADS (i.e., not evidenced by ADRs) held in a direct registration system, other than DTC, may be subject to SDRT in the U.K. See “Material Tax Considerations Related to the Merger — U.K. Tax Considerations — Material Tax Consequences to Shareholders — Stamp Duty and Stamp Duty Reserve Tax.”

If you decide to hold your ADS through your brokerage, safekeeping or other custodial account, you must rely on the procedures of your broker, bank or other financial institution to assert your rights as ADS owner. Banks, brokers or other financial institutions typically hold securities such as the ADS through clearing and settlement systems such as DTC. The procedures of such clearing and settlement systems may limit your ability to exercise your rights as an owner of ADS. Please consult with your broker, bank or other financial institution if you have any questions concerning these limitations and procedures. All ADS held through DTC will be registered in the name of a nominee of DTC. This summary description assumes you have opted to own the ADS directly by means of an ADS registered in your name and, as such, we will refer to you as the “holder.” When we refer to “you,” we assume the reader owns ADS and will own ADS at the relevant time.

 

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Dividends and Distributions

As a holder, you generally have the right to receive the distributions we make on the securities deposited with the custodian. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations, as described below. Holders will receive such distributions under the terms of the deposit agreement in proportion to the number of ADS held as of a specified record date.

Distributions of Cash

Whenever we make a cash distribution for the Class A Ordinary Shares on deposit with the custodian, we will deposit the funds with the custodian. Upon receipt of confirmation of the deposit of the requisite funds, the depositary will arrange for the funds to be converted into U.S. dollars, if necessary, and for the distribution of the U.S. dollars to the holders, subject to English law.

The conversion into U.S. dollars will take place only if practicable and if the U.S. dollars are transferable to the U.S., which we expect them to be. The amounts distributed to holders will be net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. The depositary will apply the same method for distributing the proceeds of the sale of any property (such as undistributed rights) held by the custodian in respect of securities on deposit.

Distributions of Class A Ordinary Shares

If we elect to make a free distribution of Class A Ordinary Shares for the securities on deposit with the custodian, we will deposit the applicable number of Class A Ordinary Shares with the custodian. Upon receipt of confirmation of such deposit, the depositary will either distribute to holders new ADS representing the Class A Ordinary Shares deposited or modify the ADS-to-Class A Ordinary Shares ratio, in which case each ADS you hold will represent rights and interests in the additional Class A Ordinary Shares so deposited. Only whole new ADS will be distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in the case of a cash distribution.

The distribution of new ADS or the modification of the ADS-to-Class A Ordinary Shares ratio upon a distribution of Class A Ordinary Shares will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes or governmental charges, the depositary may sell all or a portion of the new Class A Ordinary Shares so distributed.

No such distribution of new ADS will be made if it would violate a law (e.g., the U.S. securities laws) or if it is not operationally practicable. If the depositary does not distribute new ADS as described above, it may sell the Class A Ordinary Shares received upon the terms described in the deposit agreement and will distribute the proceeds of the sale as in the case of a distribution of cash.

Distributions of Rights

Whenever we intend to distribute rights to purchase additional Class A Ordinary Shares, we will provide prior notice to the depositary and we will assist the depositary in determining whether it is lawful and reasonably practicable to distribute rights to purchase additional ADS to holders.

The depositary will establish procedures to distribute rights to purchase additional ADS to holders and to enable such holders to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of ADS, and if we provide all of the documentation contemplated in the deposit agreement (such as opinions to address the lawfulness of the transaction). You may have to pay fees, expenses, taxes and other governmental charges to subscribe for the new ADS upon the exercise of your rights. The depositary is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights to purchase new Class A Ordinary Shares other than in the form of ADS.

 

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The depositary will not distribute the rights to you if:

 

   

we do not timely request that the rights be distributed to you or we request that the rights not be distributed to you;

 

   

we fail to deliver satisfactory documents to the depositary; or

 

   

it is not reasonably practicable to distribute the rights.

The depositary will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. The proceeds of such sale will be distributed to holders as in the case of a cash distribution. If the depositary is unable to sell the rights, it will allow the rights to lapse.

Elective Distributions

Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional shares, we will provide prior notice thereof to the depositary and will indicate whether we wish the elective distribution to be made available to you. In such case, we will assist the depositary in determining whether such distribution is lawful and reasonably practicable.

The depositary will make the election available to you only if it is reasonably practicable and if we have provided all of the documentation contemplated in the deposit agreement. In such case, the depositary will establish procedures to enable you to elect to receive either cash or additional ADS, in each case as described in the deposit agreement.

If the election is not made available to you, you will receive either cash or additional ADS, depending on what a shareholder under English law would receive upon failing to make an election, as more fully described in the deposit agreement.

Other Distributions

Whenever we intend to distribute property other than cash, Class A Ordinary Shares or rights to purchase additional Class A Ordinary Shares, we will notify the depositary in advance and will indicate whether we wish such distribution to be made to you. If so, we will assist the depositary in determining whether such distribution to holders is lawful and reasonably practicable.

If it is reasonably practicable to distribute such property to you and if we provide all of the documentation contemplated in the deposit agreement, the depositary will distribute the property to the holders in a manner it deems practicable.

The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes and governmental charges, the depositary may sell all or a portion of the property received.

The depositary will not distribute the property to you and will sell the property if:

 

   

we do not request that the property be distributed to you or if we ask that the property not be distributed to you;

 

   

we do not deliver satisfactory documents to the depositary; or

 

   

the depositary determines that all or a portion of the distribution to you is not reasonably practicable. The proceeds of such a sale will be distributed to holders as in the case of a cash distribution.

 

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Redemption

Whenever we decide to redeem any of the securities on deposit with the custodian, we will notify the depositary in advance. If it is practicable and if we provide all of the documentation contemplated in the deposit agreement, the depositary will provide notice of the redemption to the holders.

The custodian will be instructed to surrender the Class A Ordinary Shares being redeemed against payment of the applicable redemption price. The depositary will convert the redemption funds received into U.S. dollars, if necessary, upon the terms of the deposit agreement and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of their ADS to the depositary. You may have to pay fees, expenses, taxes and other governmental charges upon the redemption of your ADS. If less than all ADS are being redeemed, the ADS to be retired will be selected by lot or on a pro rata basis, as the depositary may determine.

Changes Affecting Class A Ordinary Shares

The Class A Ordinary Shares held on deposit for your ADS may change from time to time. For example, there may be a change in nominal or par value, a split-up, cancellation, consolidation or reclassification of such Class A Ordinary Shares or a recapitalization, reorganization, merger, consolidation or sale of assets.

If any such change were to occur, your ADS would, to the extent permitted by law, represent the right to receive the property received or exchanged in respect of the Class A Ordinary Shares held on deposit. The depositary may in such circumstances deliver new ADS to you, amend the deposit agreement, the ADRs and the applicable Registration Statement(s) on Form F-6, call for the exchange of your existing ADS for new ADS and take any other actions that are appropriate to reflect as to the ADS the change affecting the Class A Ordinary Shares. If the depositary may not lawfully distribute such property to you, the depositary may sell such property and distribute the net proceeds to you as in the case of a cash distribution.

Issuance of ADS upon Deposit of Class A Ordinary Shares

The depositary may create ADS on your behalf if you or your broker deposit Class A Ordinary Shares with the custodian. The depositary will deliver these ADS to the person you indicate only after you pay any applicable issuance fees and any charges and taxes payable for the transfer of the Class A Ordinary Shares to the custodian. Your ability to deposit Class A Ordinary Shares and receive ADS may be limited by U.S. and English law considerations applicable at the time of deposit.

The issuance of ADS may be delayed until the depositary or the custodian receives confirmation that all required approvals have been given and that the Class A Ordinary Shares have been duly transferred to the custodian. The depositary will only issue ADS in whole numbers.

When you make a deposit of Class A Ordinary Shares, you will be responsible for transferring good and valid title to the depositary. As such, you will be deemed to represent and warrant that:

 

   

the Class A Ordinary Shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained;

 

   

all preemptive (and similar) rights, if any, with respect to such Class A Ordinary Shares have been validly waived or exercised;

 

   

you are duly authorized to deposit the Class A Ordinary Shares;

 

   

the Class A Ordinary Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and are not, and the ADS issuable upon such deposit will not be, “restricted securities” (as defined in the deposit agreement); and

 

   

the Class A Ordinary Shares presented for deposit have not been stripped of any rights or entitlements.

 

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If any of the representations or warranties are incorrect in any way, we and the depositary may, at your cost and expense, take any and all actions necessary to correct the consequences of the misrepresentations.

Transfer, Combination and Split Up of ADRs

As an ADR Holder, you will be entitled to transfer, combine or split up your ADRs and the ADS evidenced thereby. For transfers of ADRs, you will have to surrender the ADRs to be transferred to the depositary and also must:

 

   

ensure that the surrendered ADR certificate is properly endorsed or otherwise in proper form for transfer;

 

   

provide such proof of identity and genuineness of signatures as the depositary deems appropriate;

 

   

provide any transfer stamps required by the State of New York or the U.S.; and

 

   

pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR Holders pursuant to the terms of the deposit agreement, upon the transfer of ADRs.

To have your ADRs either combined or split up, you must surrender the ADRs in question to the depositary with your request to have them combined or split up, and you must pay all applicable fees, charges and expenses payable by ADR Holders, pursuant to the terms of the deposit agreement, upon a combination or split up of ADRs.

Withdrawal of Class A Ordinary Shares Upon Cancellation of ADS

As a holder, you will be entitled to present your ADS to the depositary for cancellation and then receive the corresponding number of underlying Class A Ordinary Shares at the custodian’s offices. Your ability to withdraw the Class A Ordinary Shares may be limited by U.S. and English legal considerations applicable at the time of withdrawal. You assume the risk for delivery of all funds and securities upon withdrawal. Once canceled, the ADS will not have any rights under the deposit agreement.

If you hold ADS registered in your name, the depositary may ask you to provide proof of identity and genuineness of any signature and such other documents as the depositary may deem appropriate before it will cancel your ADS. The withdrawal of the Class A Ordinary Shares represented by your ADS may be delayed until the depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in mind that the depositary will only accept ADS for cancellation that represent a whole number of securities on deposit.

You will have the right to withdraw the Class A Ordinary Shares represented by your ADS at any time except for:

 

   

temporary delays that may arise because (i) the transfer books for the Class A Ordinary Shares or ADS are closed, or (ii) Class A Ordinary Shares are immobilized on account of a payment of dividends;

 

   

the period of time between the ADS record date established in connection with a shareholders’ meeting and the voting record date for shareholders for such meeting if the transfer books of the depositary are closed during such period;

 

   

until satisfaction of obligations to pay fees, taxes and similar charges; or

 

   

restrictions imposed because of laws or regulations applicable to ADS or the withdrawal of securities on deposit.

The deposit agreement may not be modified to impair your right to withdraw the securities represented by your ADS except to comply with mandatory provisions of law.

 

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Voting Rights

When a shareholders’ meeting is called, the depositary will establish an ADS record date for determining holders of ADS entitled to receive notice of the general meeting and to instruct the depositary on how to vote. If you are a holder of ADS (or a holder of ADRs) on such record date for voting, you will have the right under the deposit agreement to instruct the depositary to exercise the voting rights for the Class A Ordinary Shares represented by your ADS. The voting rights of holders of Class A Ordinary Shares are described in “Description of Class A Ordinary Shares of Rowan UK — Voting Rights.”

At our request, the depositary will distribute to holders of ADS on the ADS record date any notice of shareholders’ meeting issued by us together with information explaining how to instruct the depositary to exercise the voting rights of the Class A Ordinary Shares of Rowan UK represented by ADS.

If the depositary timely receives voting instructions from a holder of ADS, including upon delivery of instructions by means of electronic transmissions, it will endeavor to vote Class A Ordinary Shares represented by the holder’s ADS in accordance with such voting instructions.

Please note that the ability of the depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the Class A Ordinary Shares on deposit. For example, holders of ADS will be required to submit voting instructions to the depositary several days before the voting cut-off date for holders of Class A Ordinary Shares. We cannot assure you that you will receive voting materials in time to enable you to return voting instructions to the depositary in a timely manner. Class A Ordinary Shares for which no voting instructions have been received will not be voted. At our request, the depositary will also represent all Class A Ordinary Shares for the sole purpose of establishing a quorum at a meeting of shareholders.

While you generally have the right under the deposit agreement to instruct the depositary to exercise the voting rights for the Class A Ordinary Shares represented by your ADS, you may be required to present your ADS for cancellation and withdraw the corresponding number of underlying Class A Ordinary Shares for many actions, such as to make proposals at meetings of shareholders, nominate directors, call a general meeting or shareholders or seek to remove directors.

Fees and Charges

The Company has agreed to pay certain fees to the depositary and to reimburse the depositary for certain expenses pursuant to the deposit agreement or as agreed between the depositary and the Company from time to time. Additionally, the Company, the ADS holders and persons depositing Class A Ordinary Shares or surrendering ADS for cancellation and withdrawal will be required to pay the depositary certain fees and charges, as specified in the deposit agreement.

As an ADS holder you may be responsible to pay certain fees and expenses incurred by the depositary and certain taxes and governmental charges such as:

 

   

fees for the transfer and registration of Class A Ordinary Shares charged by the registrar and transfer agent for the Class A Ordinary Shares in England (i.e., upon deposit and withdrawal of Class A Ordinary Shares);

 

   

expenses incurred for converting foreign currency into U.S. dollars;

 

   

expenses for cable, telex and fax transmissions and for delivery of securities;

 

   

taxes and duties upon the transfer of securities (i.e., when Class A Ordinary Shares are deposited or withdrawn from deposit); and

 

   

fees and expenses incurred in connection with the delivery or servicing of Class A Ordinary Shares on deposit.

 

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You may also be charged certain fees in connection with the issuance, deposit, cancellation and withdrawal of the ADS. These fees, generally, will not exceed US$5.00 per 100 ADS.

We will pay to the depositary such fees and charges and reimburse the depositary for such out-of-pocket expenses as we and the depositary may agree from time to time.

Amendments and Termination

We may agree with the depositary to modify the deposit agreement at any time without your consent. We undertake to provide holders 30 days’ prior notice of any modifications that would materially prejudice any of their substantial rights under the deposit agreement. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that are reasonably necessary for the ADS to be registered under the Securities Act or to be eligible for book-entry settlement, in each case without imposing or increasing the fees and charges you would otherwise be required to pay. In addition, we may not be able to provide you with prior notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law.

You will be bound by the modifications to the deposit agreement if you continue to hold your ADS after the modifications to the deposit agreement become effective. The deposit agreement cannot be amended to prevent you from withdrawing the Class A Ordinary Shares represented by your ADS (except as permitted by law).

We have the right to direct the depositary to terminate the deposit agreement. Similarly, the depositary may in certain circumstances on its own initiative terminate the deposit agreement. In either case, the depositary must give notice to the holders at least 30 days before termination. Until termination, your rights under the deposit agreement will be unaffected during such notice period.

After termination, the depositary will continue to collect distributions received (but will not distribute any such property until you request the cancellation of your ADS) and may sell the securities held on deposit. After the sale, the depositary will hold the proceeds from such sale and any other funds then held for the holders of ADS in a non-interest bearing account. At that point, the depositary will have no further obligations to holders other than to account for the funds then held for the holders of ADS still outstanding (after deduction of applicable fees, taxes and expenses).

We are currently evaluating ways of making the Class A Ordinary Shares eligible for deposit, book-entry and clearing services at DTC, thereby making such shares eligible for listing on the NYSE in lieu of ADS. In such event, Rowan UK shareholders would be able to readily hold and trade Class A Ordinary Shares instead of ADS. In such event, we would terminate or modify the deposit agreement and cause the underlying Class A Ordinary Shares to be withdrawn. There can be no assurance that we will be successful in doing so or that, if successful, the costs to shareholders of transferring shares will not be higher.

Books of Depositary

The depositary will maintain ADS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the ADS and the deposit agreement.

The depositary will maintain facilities in New York to record and process the issuance, cancellation, combination, split-up and transfer of ADS. These facilities may be closed from time to time, to the extent not prohibited by law.

 

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Limitations on Obligations and Liabilities

The deposit agreement limits our obligations and the depositary’s obligations to you. Please note the following:

 

   

we and the depositary are obligated only to take the actions specifically stated in the deposit agreement without negligence or bad faith;

 

   

the depositary disclaims any liability for any failure to carry out voting instructions and for any manner in which a vote is cast or for the effect of any vote, provided it acts in good faith and in accordance with the terms of the deposit agreement;

 

   

the depositary disclaims any liability for any failure to determine the lawfulness or practicality of any action, for the content of any document forwarded to you on our behalf or for the accuracy of any translation of such a document, for the investment risks associated with investing in Class A Ordinary Shares, for the validity or worth of the Class A Ordinary Shares, for any tax consequences that result from the ownership of ADS, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the deposit agreement and for the timeliness of any of our notices or for our failure to give notice;

 

   

we and the depositary will not be obligated to perform any act that is inconsistent with the terms of the deposit agreement;

 

   

we and the depositary disclaim any liability if we or the depositary are prevented or forbidden from or subject to any civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by the terms of the deposit agreement, by reason of any provision, present or future of any law or regulation, or by reason of present or future provision of any provision of our articles of association, as amended from time to time, or any provision of or governing the securities on deposit, or by reason of any act of God or war or other circumstances beyond our control;

 

   

we and the depositary disclaim any liability by reason of any exercise of, or failure to exercise, any discretion provided for the deposit agreement or in our articles of association, as amended from time to time, or in any provisions of or governing the securities on deposit;

 

   

we and the depositary further disclaim any liability for any action or inaction in reliance on the advice or information received from legal counsel, accountants, any person presenting Class A Ordinary Shares for deposit, any holder of ADS or authorized representatives thereof, or any other person believed by either of us in good faith to be competent to give such advice or information;

 

   

we and the depositary also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other benefit that is made available to holders of Class A Ordinary Shares but is not, under the terms of the deposit agreement, made available to you;

 

   

we and the depositary may rely without any liability upon any written notice, request or other document believed to be genuine and to have been signed or presented by the proper parties; and

 

   

we and the depositary also disclaim liability for any consequential or punitive damages for any breach of the terms of the deposit agreement.

Pre-Release Transactions

The depositary may, in certain circumstances, issue ADS before receiving a deposit of Class A Ordinary Shares or release Class A Ordinary Shares before receiving ADS for cancellation. These transactions are commonly referred to as “pre-release transactions.” The deposit agreement limits the aggregate size of pre-release transactions and imposes a number of conditions on such transactions (i.e., the need to receive collateral, the type of collateral required, the representations required from brokers, etc.). The depositary may retain the compensation received from the pre-release transactions.

 

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Taxes

You will be responsible for the taxes and other governmental charges payable on the ADS and the securities represented by the ADS. We, the depositary and the custodian may deduct from any distribution the taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable for any deficiency if the sale proceeds do not cover the taxes that are due.

The depositary may refuse to issue ADS, to deliver, transfer, split and combine ADRs or to release securities on deposit until all taxes and charges are paid by the applicable holder. The depositary and the custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to the depositary and to the custodian proof of taxpayer status and residence and such other information as the depositary and the custodian may require to fulfill legal obligations.

You are required to indemnify us, the depositary and the custodian for any claims with respect to taxes based on any tax benefit obtained for you.

Foreign Currency Conversion

We intend to make distributions in U.S. dollars. To the extent any distributions are made in currencies other than U.S. dollars, the depositary will arrange for the conversion of all non-U.S. currency received into U.S. dollars if such conversion is practical, and it will distribute the U.S. dollars in accordance with the terms of the deposit agreement. You may have to pay fees and expenses incurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and other governmental requirements.

If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not obtainable at a reasonable cost or within a reasonable period, the depositary may take the following actions in its discretion:

 

   

convert the foreign currency to the extent practical and lawful and distribute the U.S. dollars to the holders for whom the conversion and distribution is lawful and practical;

 

   

distribute the foreign currency to holders for whom the distribution is lawful and practical; or

 

   

hold the foreign currency (without liability for interest) for the applicable holders.

 

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COMPARISON OF RIGHTS OF STOCKHOLDERS/SHAREHOLDERS

Your rights as a stockholder of Rowan Delaware are governed by the DGCL and Rowan Delaware’s certificate of incorporation and bylaws. After the merger, you, through the ownership of ADS and subject to the terms of the deposit agreement, will have the rights of a shareholder of Rowan UK, and your rights will generally be governed by English law and the New Articles.

The economic and voting rights of shares of common stock of Rowan Delaware and the ADS representing Class A Ordinary Shares of Rowan UK are similar. However, there are differences between shareholder’s rights under the DGCL, the deposit agreement and under applicable English law. In addition, there will be differences between Rowan Delaware’s certificate of incorporation and bylaws and the New Articles.

The following discussion is a summary of the material differences in your rights that would result from the merger and assuming you hold ADS representing Class A Ordinary Shares. As such, this summary does not cover all of the differences between Rowan Delaware’s certificate of incorporation and bylaws and the New Articles. While we believe this summary is accurate in all material respects, the following descriptions are qualified in their entirety by reference to the complete text of the relevant provisions of applicable English law, the DGCL, Rowan Delaware’s certificate of incorporation and bylaws, the deposit agreement and the New Articles. We encourage you to read those laws and documents. A copy of the New Articles, substantially as are proposed to be adopted immediately prior to the consummation of the merger, is found in the form attached to this proxy statement/prospectus as Annex B. For information as to how you can obtain a copy of Rowan Delaware’s certificate of incorporation and bylaws, see “Where You Can Find More Information.” Further, to exercise some of the rights reserved to registered holders of Class A Ordinary Shares, you would need to surrender your ADS and withdraw the underlying Class A Ordinary Shares. See “Description of American Depositary Shares of Rowan UK — Withdrawal of Class A Ordinary Shares Upon Cancellation of ADS.”

 

Provisions Currently Applicable to

Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

Voting Rights
Voting, Generally  

•    Each stockholder is entitled to one vote for each share of capital stock held by the stockholder, unless the certificate of incorporation or a certificate of designation provides otherwise.

 

•    If issued, the voting rights of holders of preferred stock will be determined by the certificate of incorporation or the certificate of designation with respect to such preferred stock.

 

•    Rowan Delaware’s bylaws also provide that, as a general matter, when a quorum is present, action on a matter will be approved if the votes cast in favor of the matter exceed the votes cast opposing the matter.

 

•    Certain special matters, such as approval of a merger or adoption of an amendment to the certificate of incorporation, require the approval of the holders of a majority of the outstanding shares of common stock.

 

•    Each shareholder of Rowan UK is entitled to one vote for each Class A Ordinary Share held by such shareholder.

 

•    If issued, the voting rights of holders of any additional shares that may be issued will be determined by the Rowan UK Board in accordance with the New Articles.

 

•    Under English law and the New Articles, certain matters require “ordinary resolutions,” which must be approved by at least a majority of the votes cast by shareholders, and certain other matters require “special resolutions,” which require the affirmative vote of at least 75 percent of the votes cast at the meeting.

 

•    An ordinary resolution is needed to (among other matters): remove a director; provide, vary or renew a director’s authority to allot shares; and appoint directors (where appointment is by shareholders).

 

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Provisions Currently Applicable to

Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

 

 

•    A special resolution is needed to (among other matters): alter a company’s articles of association, change the company’s name, exclude statutory preemptive rights on allotment of securities for cash; reduce a company’s share capital; re-register a public company as a private company (or vice versa); approve a scheme of arrangement.

 

•    The Rowan UK Board will also have the authority under the New Articles to change the company’s name.

Record Date  

•    Rowan Delaware’s bylaws provide that the record date for determining the stockholders entitled to attend and vote at any meeting shall be not more than 60 days and not less than 10 days prior to the meeting date.

 

•    The New Articles provide that the record date for determining the shareholders entitled to attend and vote at any meeting shall be not more than 60 days, unless a shorter time is required by law, and not less than 10 days, unless a shorter time is required by law, in which case the record date will be the maximum time permitted by law. English law currently provides that, so long as the Class A Ordinary Shares are issued in uncertificated form or are admitted to trading on a regulated market in the European Economic Area, the maximum specified period of time for determining the shareholders entitled to attend and vote at any meeting shall be no more than 48 hours before the time fixed for the meeting with no account being taken of any part of a day that is not a working day.

Quorum  

•    Holders of at least a majority of the stock outstanding and entitled to vote, present at a meeting, shall constitute a quorum.

 

•    Holders of at least a majority of the shares issued and entitled to vote, present at a general meeting, shall constitute a quorum.

Cumulative Voting  

•    In accordance with Delaware law, because Rowan Delaware’s certificate of incorporation or bylaws do not authorize cumulative voting of common stock or preferred stock, cumulative voting is not permitted.

 

•    Cumulative voting is not recognized under English law.

Action by Written Consent

•    Rowan Delaware’s certificate of incorporation prohibits stockholder action by written consent.

 

•    Under English law, a public limited company’s shareholders cannot pass a resolution by written consent; they can only pass resolutions taken at shareholder meetings.

 

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Provisions Currently Applicable to

Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

Shareholder Proposals and Shareholder Nominations of Directors

Shareholders’ Ability to Call a Special Meeting

 

•    Rowan Delaware’s bylaws do not permit the company’s stockholders to call a special meeting of stockholders. Under Delaware law, any stockholder may petition the Court of Chancery to order a meeting to elect directors if such meeting, or action to elect directors by written consent in lieu of a meeting, has not been held within thirteen months.

 

•    Under English law, the ownership of shares (by one or more shareholders) representing five percent of the paid-up capital of Rowan UK carrying voting rights gives the right to requisition the holding of a general meeting of shareholders. See “Special Meetings of Shareholders” below.

Shareholder Proposals: Director Nominations, Generally  

•    One or more shareholders holding at least five percent of the paid-up capital of Rowan UK carrying voting rights can require resolutions to be put before the annual general meeting. The request must be received at least six weeks before the relevant annual general meeting. If so requested, the company is required to give notice of a resolution in the same manner and at the same time (or as soon as reasonably practical thereafter) as the notice of the annual general meeting. Holders of ADS may have to surrender their ADS and withdraw their Class A Ordinary Shares in order to exercise their rights to require resolutions to be put before the annual general meeting.

 

•    All shareholder resolutions thus proposed must not be

 

(1) if passed, ineffective (whether by reason of inconsistency with any enactment or the New Articles);

 

(2) defamatory of any person; or

 

(3) frivolous or vexatious.

•    Under Rowan Delaware’s bylaws, stockholders have an express right to nominate candidates for election to the Board and bring other business before an annual meeting, provided the shareholder was a stockholder of record at the time notice was given of the meeting and is a stockholder at the time of the meeting, is entitled to vote at the meeting and complies with the notice procedures set forth below as to such business or nomination. The shareholder must give timely notice and the notice must

 

(1) set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, (ii) the class or series and number of equity and other securities owned, and certain other information regarding shareholder ownership of shares and transactions or interests regarding Rowan Delaware or its securities, (iii) any other information relating to such stockholder and

 

beneficial owner that would be required to be disclosed in a proxy, (iv) a representation that the stockholder is a holder of record, is entitled to vote at such meeting an intends to appear to at such meeting and propose such business, and (v) a representation as to whether the stockholder or any person or group associated with the stockholder intends to deliver a proxy statement to Rowan Delaware’s stockholders or otherwise solicit vote from Rowan Delaware’s stockholders;

 

(2) if the notice relates to any business other than a nomination of a director(s), set forth (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder and beneficial owner in such business and

 

 

•    One or more shareholders holding at least five percent of the paid-up capital of Rowan UK carrying voting rights, or at least 100 shareholders who have a right to vote and hold (on average) at least £100 per shareholder of paid-up share capital, can require the company to circulate to shareholders a statement of up to 1,000 words relating to a matter referred to in a proposed resolution or any other business matter to be dealt with in any type of general meeting. The request must be received at least one week before the meeting to which it relates. If so requested, the company is required to circulate a statement in the same manner and at the same time (or as soon as reasonably practical

 

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Provisions Currently Applicable to

Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

(ii) a description of all agreements, between such stockholder and beneficial owner, and any other person in connection with the proposal of such business by such stockholder;

 

(3) set forth, for each nominee (i) information relating to such person that would be required to be disclosed in a proxy statement and (ii) a description of all direct and indirect compensation during the past three years, and any other material relationships, between or among such stockholder and beneficial owner on the one hand, and each proposed nominee, on the other hand; and

 

(4) include a completed and signed questionnaire, representation and agreement for each director nominee.

 

•    To be timely, a stockholder’s notice must be delivered to the secretary of the corporation not later than the close of business on the 90th day and not earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting, subject to any other requirements of law; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the corporation.

 

•    Under Rowan Delaware’s bylaws and except as otherwise provided by law, the certificate of incorporation or the bylaws, the person presiding over the meeting shall determine whether a nomination or any business proposed to be brought before the meeting was properly made and if not, to declare that such defective proposal or nomination shall be disregarded.

 

thereafter) as the notice of the relevant general meeting. Holders of ADS may have to surrender their ADS and withdraw their Class A Ordinary Shares in order to exercise their rights to require the company to circulate a statement to shareholders.

 

•    Shareholders, whether individually or collectively, who do not meet the five percent threshold will not be entitled to nominate a director or propose a shareholder resolution for consideration at a meeting of the shareholders, except for shareholder proposals required by SEC Rule 14a-8 under the Exchange Act.

 

•    Directors of Rowan UK that are proposed to be elected at a shareholder meeting generally must be elected individually pursuant to separate proposals at the meeting; more than one director cannot be elected under the same shareholder proposal.

 

•    The New Articles continue Rowan Delaware’s current mechanism for nominating directors, subject to the five percent shareholding requirement set forth above.

 

•    To be timely, a shareholder’s notice must be delivered to the secretary of the company not earlier than the close of business on the 75th day and not later than the close of business on the 50th day prior to the first anniversary of the

preceding year’s annual general meeting, subject to any other requirements of law; provided, however, that in the event that the date of the annual general meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 75th day prior to the date of such annual general meeting and not later than the close of business on the later of the 50th day prior to the date of such annual general meeting or, if the first public announcement of the date of such annual general meeting is less than 65 days prior to the date of such annual general meeting, the 15th day following the day on which public announcement of the date of such meeting is first made by the company.

 

 

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•    Under the New Articles and except as otherwise provided by law, the chairman of the meeting shall determine whether a nomination or any business proposed to be brought before the meeting was properly made and, if not, to declare that such defective proposal or nomination shall be disregarded.

Sources and Payment of Dividends

Sources of Dividends

 

•    Under Delaware law, subject to any restriction in the corporation’s certificate of incorporation, the board of directors may declare and pay dividends out of:

 

(1) surplus of the corporation, which is defined as net assets less statutory capital; or

 

(2) if no surplus exists, out of the net profits of the corporation for the year in which the dividend is declared and/or the preceding year;

 

provided, however, that if the capital of the corporation has been diminished to an amount less than the aggregate amount of capital represented by the outstanding stock of all classes having preference upon the distribution of assets, the board of directors may not declare and pay dividends out of the corporation’s net profits until the deficiency in the capital has been repaired.

 

•    Rowan UK may pay dividends on its ordinary shares only out of its “distributable profits,” defined as accumulated, realized profits less accumulated, realized losses, and not out of share capital, which includes share premiums (which are equal to the excess of the consideration for the issuance of shares over the aggregate nominal amount of such shares).

 

•    In addition, under English law, Rowan UK will not be permitted to make a distribution if, at the time, the amount of its net assets is less than the aggregate of its issued and paid-up share capital and undistributable reserves or to the extent that the distribution will reduce the net assets below such amount.

Declaration of Dividends

 

•    Rowan Delaware’s certificate of incorporation provides that dividends (payable in cash, stock or otherwise) may be declared by the Board from time to time out of any funds legally available therefor.

 

•    The New Articles authorize the Rowan UK Board to declare dividends if it considers that the financial position of Rowan UK justifies such payment.

 

•    The New Articles provide that dividends may be paid in cash or in property, paid-up shares, or debentures of another company.

 

•    The New Articles provide that shares held by or for the benefit of subsidiaries of Rowan UK will not be entitled to dividends, including any scrip dividends, bonus shares or dividends or distributions of property or debentures of any other company.

 

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Record Date  

•    Rowan Delaware’s bylaws provide that for dividends and other matters, the record date must be set not more than 60 days prior to such action.

 

•    The New Articles provide that, subject to certain restrictions, the Rowan UK Board may set the record date for a dividend or other distribution, provided the date is not more than 60 days before the date of declaration of the dividend.

Purchase and Redemption of Stock
Purchase and Redemption of Stock, Generally  

 

•    Under Delaware law, a corporation may purchase, redeem, receive, take or otherwise acquire, own and hold, sell, lend, exchange, transfer or otherwise dispose of, pledge, use and otherwise deal in and with its own shares; provided, however, that no corporation shall:

 

(1) purchase or redeem its own shares of capital stock for cash or other property when the capital of the corporation is impaired or when such purchase or redemption would cause any impairment of the capital of the corporation, except that a corporation may purchase or redeem out of capital any of its own shares which are entitled upon any distribution of its assets, whether by dividend or in liquidation, to a preference over another class or series of its stock, or, if no shares entitled to such a preference are outstanding, any of its own shares, if such shares will be retired upon their acquisition and the capital of the corporation reduced;

 

(2) purchase, for more than the price at which they may then be redeemed, any of its shares which are redeemable at the option of the corporation; or

 

(3) redeem any of its shares unless their redemption is authorized by a subsection of the DGCL and then only in accordance with such section and the certificate of incorporation.

 

•    Under Delaware law, a corporation has a right to resell any of its shares theretofore purchased or redeemed out of surplus and which have not been retired, for such consideration as shall be fixed by the board of directors.

 

 

•    The New Articles provide that Rowan UK may purchase its own shares, which, if purchased “off market,” requires approval of the shareholders by special resolution (75 percent of votes cast), and redeem outstanding redeemable shares. Immediately prior to the effective time of the merger, Rowan Delaware, as the sole shareholder of Rowan UK, is expected to pass a special resolution, which would authorize the repurchase of up to 30 percent per annum of the issued share capital as of the beginning of each fiscal year for a five year period (subject to an overall aggregate maximum number of shares to be set forth in the special resolution). Shareholder approval would be necessary no less frequently than every five years to renew this authorization.

 

•    Rowan UK may redeem or purchase shares only if the shares are fully paid and only out of:

 

(1) distributable profits; or

 

(2) the proceeds of a new issue of shares made for the purpose of the purchase or redemption.

 

 

•    Under English law, any shares (including redeemable shares) purchased by Rowan UK must then be cancelled and cannot be resold by the company.

Voting Treasury Stock  

 

•    Under Delaware law, shares of its own capital stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the

 

 

•    Under English law, any shares held by a subsidiary of Rowan UK may not be voted or counted for determining quorum and, because Rowan UK shares will not be quoted on certain exchanges in the European Economic Area (i.e.,

 

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corporation, are neither entitled to vote nor counted for quorum purposes. However, a corporation has a right to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

 

•    Under Delaware law, shares which have been called for redemption shall not be deemed to be outstanding shares for the purpose of voting or determining the total number of shares entitled to vote on any matter on and after the date on which written notice of redemption has been sent to holders thereof and a sum sufficient to redeem such shares has been irrevocably deposited or set aside to pay the redemption price to the holders of the shares upon surrender of certificates therefor.

 

the shares will be listed only on the NYSE), it may not hold treasury shares.

 

•    Any redeemable shares which are redeemed by Rowan UK must be cancelled, but pending redemption could be voted and deemed issued for the purpose of determining the total number of shares entitled to vote on any such matter unless the terms of issue provide otherwise.

Meetings of Shareholders

 

•    Rowan Delaware’s bylaws provide that all meetings of stockholders are to be held at any place designated by the Board. Also, written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than 10 nor more than 60 days before the date of the meeting.

 

 

•    The New Articles provide that the Rowan UK Board, chairman, or chief executive officer may convene general meetings of the shareholders at any place they so designate.

 

•    The notice of the general meeting must state the time, date and place of the meeting and the general nature of the business to be dealt with. The general meeting may be within or outside the U.K.

 

•    Rowan UK must hold its annual general meeting within six months from the day following the end of its fiscal year.

 

 

•    Under English law, an annual general meeting must be called by at least 21 clear days’ notice. It is possible to extend this notice period in the company’s articles of association. This notice period can be shortened if all shareholders who are permitted to attend and vote agree to the shorter notice. A meeting other than the annual general meeting must be called by not less than 14 clear days’ notice, but this too can be longer or shortened by agreement. The maximum notice in the New Articles is 60 days for both types of meeting.

 

•    “Clear days” means calendar days and excludes (1) the date on which a notice is given or a request received; and (2) the date of the meeting itself.

 

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Special Meetings of Shareholders
Calling a Special Meeting  

•    Rowan Delaware’s certificate of incorporation and bylaws provide that special meetings of stockholders may be called only on the order of:

 

(1) the Board; or

 

(2) the chairman of the Board; or

 

(3) the chief executive officer.

 

•    The New Articles provide that general meetings of shareholders may be called on the order of:

 

(1) the Rowan UK Board; or

 

(2) the chairman of the Rowan UK Board; or

 

(3) the chief executive officer.

 

•    Under English law, one or more shareholders representing at least five percent of the paid up capital of Rowan UK carrying voting rights also have the right to requisition the holding of a general meeting. Holders of ADS may have to surrender their ADS and withdraw their Class A Ordinary Shares in order to exercise their right to requisition the holding of a general meeting.

Notice  

•    Rowan Delaware’s bylaws provide that stockholders entitled to vote at such special meeting must receive notice of the meeting not less than 10 days and not more than 60 days prior to the meeting. This notice must state the place, date and hour of the meeting and the purpose or purposes for which the meeting is called. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

 

•    English law requires that notice of a general meeting of shareholders (other than the annual general meeting convened by the officers, which requires at least 21 clear days) must be delivered to the shareholders at least 14 clear days prior to the meeting. Under the New Articles the notice must be delivered not more than 60 days prior to the meeting. This notice must state the place, date and hour of the meeting and the purpose or purposes for which the meeting is called. Business transacted at any general meeting of shareholders shall be limited to the purposes stated in the notice.

 

•    Where the meeting is properly requisitioned by the shareholders of Rowan UK, the Rowan UK Board must call the general meeting within 21 days, and the meeting itself must be held not more than 28 days after the date of the notice convening the meeting.

 

•    Notice periods for general meetings can be shortened for public companies if shareholders holding 95 percent of the voting rights agree to hold the meeting at short notice. In the case of annual general meetings, all shareholders entitled to attend and vote must agree to short notice.

 

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Appraisal Rights
To Whom are Appraisal Rights Available  

•    Under Delaware law, stockholders of a corporation involved in a merger who hold shares of stock on the date a demand is made with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, and who has neither voted in favor of the merger or consolidation nor consented thereto in writing generally have the right to demand and receive payment in cash of the fair value of their stock as determined by the Delaware Court of Chancery, in lieu of receiving the merger consideration.

 

•    English law does not provide for “appraisal rights” similar to those rights under Delaware law. However, English law will provide for dissenter’s rights which permit a shareholder to object to a court in the context of the compulsory acquisition of minority shares. See “Shareholders’ Votes on Certain Transactions” below.

Exceptions to Appraisal Rights  

 

•    Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation if the holders are required by the terms of an agreement of merger or consolidation to accept for such stock anything except:

 

(1) shares of stock of the corporation surviving or resulting from such merger or consolidation, or depositary receipts in respect thereof;

 

(2) shares of stock or depositary receipts of another corporation that, at the effective date of the merger, will be either(a) listed on a national securities exchange; or (b) held of record by more than 2,000 holders;

 

(3) cash in lieu of fractional shares of the stock or depositary receipts received; or

 

(4) any combination of the shares of stock, depositary receipts and cash in lieu of fractional shares or fractional depositary receipts described in the foregoing (1) – (3).

 

In addition, appraisal rights are not available to the holders of shares of the surviving corporation in the merger, if the merger does not require the approval of the stockholders of that corporation.

 

 

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Preemptive Rights

•    Under Delaware law, a stockholder is not entitled to preemptive rights to subscribe for additional issuances of stock or any security convertible into stock unless they are specifically granted in the certificate of incorporation.

 

•    Rowan Delaware’s certificate of incorporation provides that the Board may issue authorized but unissued shares for such consideration as it may determine, and holders of common stock and preferred stock shall have no preemptive rights to purchase any shares or securities of any class, including treasury shares, which may at any time be issued or sold or offered for sale by the corporation.

 

•    Under English law, unless either a special resolution to the contrary has been passed by the shareholders or there is a provision in the articles of association conferring a corresponding right, the issuance for cash of the following securities must generally be offered first to the existing ordinary shareholders in proportion to the respective nominal values of their holdings:

 

(1) equity securities (i.e., ordinary shares, which are shares other than shares which, with respect to dividends or capital, carry a right to participate only up to a specified amount in a distribution); or

 

(2) rights to subscribe for or convert securities into, ordinary shares.

 

•    English law permits a company’s shareholders by special resolution or a provision in a company’s articles of association to exclude preemptive rights for a period of up to five years.

 

•    Preemptive rights do not generally apply to a company’s issuance of shares in exchange for consideration other than cash.

 

•    Immediately prior to the effective time of the merger, Rowan Delaware, as the sole shareholder of Rowan UK, is expected to pass a special resolution to exclude preemptive rights for a period of five years with respect to the allotment of shares up to an aggregate nominal amount of US$18,750,000. Shareholder approval would be necessary no less frequently than every five years to renew this authorization. See “Description of Class A Ordinary Shares of Rowan UK — Preemptive Rights and New Issues of Shares.”

Amendment of Governing Instruments

 

•    Under Delaware law, unless the certificate of incorporation requires a greater vote, an amendment to the certificate of incorporation requires:

 

(1) recommendation of the board of directors;

 

(2) the affirmative vote of a majority of the outstanding stock entitled to vote; and

 

 

•    The provisions in the articles of association of an English public limited company are generally equivalent to the collective provisions in a certificate of incorporation and bylaws of a Delaware corporation.

 

•    Under English law, a special resolution of the shareholders is required to amend any provision of the New Articles. The Rowan UK Board does not have the power to amend the New Articles without shareholder approval.

 

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(3) the affirmative vote of a majority of the outstanding stock of each class entitled to vote.

 

•    Rowan Delaware’s bylaws provide that the bylaws may be altered, amended or repealed by a vote of the stockholders holding a majority of the company’s shares entitled to vote in the election of directors.

 

•    Under Delaware law, if provided by the certificate of incorporation, the board of directors has the power to adopt, amend or repeal the bylaws of a company. Rowan Delaware’s certificate of incorporation authorizes the Board to alter, amend, repeal or adopt new bylaws.

 
Preferred Stock/Additional Shares

 

•    Rowan Delaware’s certificate of incorporation authorizes the Board:

 

(1) to provide for the issuance of one or more series of preferred stock;

 

(2) to establish from time to time the number of shares to be included in such series; and

 

(3) to fix the powers, designations, preferences, and relative participating, optional, or other special rights, and qualifications, limitations and restrictions thereof.

 

Rowan Delaware currently does not have any shares of preferred stock outstanding.

 

 

•    Preferred shares can be issued by English companies, giving the holders rights of priority over ordinary shareholders.

 

•    Subject to there being an unexpired authority to allot shares, the New Articles permit the Rowan UK Board to issue shares with rights to be determined by the Rowan UK Board at the time of issuance, which may include preferred rights.

Stock Class Rights

 

•    Under Delaware law, any change to the rights of holders of Rowan Delaware’s common or preferred stock would require an amendment to Rowan Delaware’s certificate of incorporation or the applicable certificate of designation. Holders of shares of a class are entitled to vote as a class upon a proposed amendment to the certificate of incorporation if the amendment will:

 

(1) increase or decrease the authorized shares of the class;

 

(2) increase or decrease the par value of the shares of the class; or

 

(3) alter or change the powers, preferences or special rights of the shares of the class so as to affect them adversely.

 

 

•    Amendments affecting the rights of the holders of any class of shares may, depending on the rights attached to the class and the nature of the amendments, also require approval of the class affected at a separate class meeting.

 

•    The New Articles provide that shareholders of the relevant class of shares can approve any amendment to their rights either by:

 

(1) consent in writing of shareholders holding at least 75 percent of the issued shares of that class by amount; or

 

(2) a special resolution passed at a class meeting of the relevant class.

 

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Shareholders’ Votes on Certain Transactions
Approval of Mergers and Acquisitions Generally  

•    Generally, under Delaware law, unless the certificate of incorporation provides for the vote of a larger portion of the stock, completion of a merger or consolidation or substantially all of a corporation’s assets or dissolution requires:

 

(1) the approval of the board of directors; and

 

(2) approvals by the vote of the holders of a majority of the outstanding stock or, if the certificate of incorporation provides for more or less than one vote per share, a majority of the votes of the outstanding stock of a corporation entitled to vote on the matter.

 

•    Rowan Delaware’s certificate of incorporation does not provide for a higher vote for certain transactions than a majority vote of the stockholders.

 

•    As noted above, “ordinary resolutions” must be approved by at least a majority of the votes cast by shareholders. “Special resolutions” require the affirmative vote of at least 75 percent of the votes cast at the meeting to be approved.

 

•    There is no concept of a statutory merger under English law (except where an English company merges with another company based in the European Economic Area).

 

•    Under English law and subject to applicable U.S. securities laws and NYSE rules and regulations, as a general matter, unless Rowan UK proposes to issue 20 percent or more of its Class A Ordinary Shares or ADS in the transaction, where Rowan UK proposes to acquire another company, approval of Rowan UK’s shareholders is not required.

 

•    Under English law, where another company proposes to acquire Rowan UK, the requirement for the approval of the shareholders of Rowan UK depends on the method of acquisition.

 

•    Under English law, schemes of arrangement are arrangements or compromises between a company and any class of shareholders or creditors, and are used in certain types of reconstructions, amalgamations, capital reorganizations or takeovers (similar to a merger in the U.S.). Such arrangements require the approval of (i) a majority in number of shareholders or creditors (as the case may be) representing 75 percent in value of the creditors or class of creditors or shareholders or class of shareholders present and voting either in person or by proxy at a special meeting convened by order of the court; and (ii) the English court.

 

•    Once approved, sanctioned and becoming effective, all shareholders and creditors of the relevant class are bound by the terms of the scheme, and a dissenting shareholder would have no rights comparable to appraisal rights provided under Delaware law.

 

•    A dissenting shareholder may object to the transfer on the basis that the bidder is not entitled to acquire shares or to specify terms of

 

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acquisition different from those in the offer by applying to the court within six weeks of the date on which notice of the transfer was given. In the absence of fraud or oppression, the court is unlikely to order that the acquisition shall not take effect, but it may specify terms of the transfer that it finds appropriate.

 

•    Under the Companies Act, if an offeror were to acquire or unconditionally contract to acquire 90 percent of the shares to which the offer relates and 90 percent of the voting rights attached to those shares, then, within three months of the last day on which its offer can be accepted, it could compulsorily acquire the remaining 10 percent. It would do so by sending a notice to outstanding shareholders telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the issued shares in its favor and pay the consideration to Rowan UK, which would hold the consideration in trust for outstanding shareholders. The consideration offered to the shareholders whose shares are compulsorily acquired must, in general, be the same as the consideration that was available under the takeover offer. See “Description of Class A Ordinary Shares of Rowan UK—Squeeze-out & Sell-out Provisions.”

 

•    A minority shareholder is also entitled in similar circumstances to require the offeror to acquire his or her shares on the terms of the offer. See “Description of Class A Ordinary Shares of Rowan UK—Squeeze-out & Sell-out Provisions.”

Related Party Transactions  

•    Under the rules of the NYSE, shareholder approval is required prior to the issuance of common stock, or of securities convertible into or exercisable for common stock, in any transaction or series of related transactions, to:

 

(1) a director, officer or substantial security holder of the company, referred to as a “related party;”

 

(2) a subsidiary, affiliate or other closely-related person of a related party; or

 

•    Rowan UK will be subject to the rules of the NYSE regarding related party transactions.

 

•    Under English law, certain transactions between a director and a related company of which he or she is a director are prohibited unless approved by the shareholders, such as loans, credit transactions and substantial property transactions.

 

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(3) any company or entity in which a related party has a substantial direct or indirect interest; if the number of shares of common stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either one percent of the number of shares of common stock or one percent of the voting power outstanding before the issuance.

 

However, if the related party involved in the transaction is classified as such solely because such person is a substantial security holder, and if the issuance relates to a sale of stock for cash at a price at least as great as each of the book and market value of the issuer’s common stock, then shareholder approval will not be required unless the number of shares of common stock to be issued, or unless the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either five percent of the number of shares of common stock or five percent of the voting power outstanding before the issuance.

 

Loans to directors and executive officers are prohibited under U.S. securities laws.

 
Greater than 20 Percent Change in Common Shares or Voting Power  

•    Under the rules of the NYSE, stockholder approval is required prior to the issuance of common stock, or of securities convertible into or exercisable for common stock, in any transaction or series of related transactions if:

 

(1) the common stock has, or will have upon issuance, voting power equal to or in excess of 20 percent of the voting power outstanding before the issuance of such stock or of securities convertible into or exercisable for common stock; or

 

(2) the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20 percent of the number of shares of common stock outstanding before the issuance of the common stock or of securities convertible into or exercisable for common stock.

 

•    Rowan UK will continue to be subject to the rules of the NYSE regarding the issuances of shares representing 20 percent or more of its issued share capital.

 

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Rowan Delaware Stockholders

 

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Rowan UK Shareholders

Rights of Inspection
Rights of Inspection Generally  

 

•    Delaware law allows any stockholder in person or by attorney or other agent, upon written demand under oath stating the purpose thereof, during the usual hours for business to inspect for any proper purpose, and to make copies and extracts from:

 

(1) the corporation’s stock ledger, a list of its stockholders, and its other books and records; and

 

(2) a subsidiary’s books and records, to the extent that:

 

(A) the corporation has actual possession and control of such records of such subsidiary; or

 

(B) the corporation could obtain such records through the exercise of control over such subsidiary, provided that as of the date of the making of the demand:

 

(i) the stockholder inspection of such books and records of the subsidiary would not constitute a breach of an agreement between the corporation or the subsidiary and a person or persons not affiliated with the corporation; and

 

(ii) the subsidiary would not have the right under the law applicable to it to deny the corporation access to such books and records upon demand by the corporation.

 

 

•    Generally, the register and index of names of shareholders of Rowan UK may be inspected at any time (1) for free, by its shareholders, and (2) for a fee by any other person.

 

•    The inspecting shareholder has to show he or she has a proper purpose in inspecting the register. Documents may be copied for a fee.

 

•    The service contracts, if any, of Rowan UK’s directors can be inspected without charge and during business hours. In this and certain other contexts under applicable English law, a “director” includes certain executive officers and a “service contract” includes any contract under which such a director or executive officer undertakes personally to provide services to the company or a subsidiary company, whether in that person’s capacity as a director, an executive officer or otherwise.

 

•    The shareholders of Rowan UK may also inspect, without charge and during business hours, the minutes of meetings of the shareholders for the previous 10 years and obtain copies of the minutes for a fee.

 

•    In addition, the published annual accounts of Rowan UK are required to be available for shareholders at a general meeting and a shareholder is entitled to a copy of these accounts. The accounts must also be made available on Rowan UK’s website and remain available until the accounts for the next financial year are placed on the website.

 

•    Under English law, the shareholders of a company do not have the right to inspect the corporate books of a subsidiary of that company.

 

•    The New Articles permit shareholders to examine a complete list of shareholders prior to, and at, a shareholder meeting.

Stockholder List  

 

•    Rowan Delaware’s bylaws state that a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order for each class of stock, and showing the address of each stockholder and the number of shares registered in

 

 

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the name of each stockholder shall be open to the examination of any stockholder, for any purpose germane to the shareholder meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, on a reasonably accessible electronic network. The list shall also be produced and kept at the time and place of the meeting and may be inspected by any stockholder who is present.

 
Standard of Conduct for Directors

 

•    Delaware law does not contain any specific provisions setting forth the standard of conduct of a director. The scope of the fiduciary duties of the Board is thus determined by the courts of the State of Delaware. In general, directors have a duty to act in good faith, on an informed basis and in a manner they reasonably believe to be in the best interests of the stockholders.

 

•    Rowan Delaware’s bylaws state that the number of directors of the corporation shall be fixed from time to time by resolution adopted by the Board. The current number of directors is 12. The Board currently consists of 12 directors, one of whom is an executive officer of Rowan Delaware.

 

 

•    English law imposes certain specific obligations on the directors of Rowan UK. In addition to certain common law and equitable principles, there are statutory director duties, including seven codified duties as follows:

 

(1) to act in a way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole;

 

(2) to act in accordance with the company’s constitution and exercise powers only for the purposes for which they are conferred;

 

(3) to exercise independent judgment;

 

(4) to exercise reasonable care, skill and diligence;

 

(5) to avoid conflicts of interest;

 

(6) not to accept benefits from third parties; and

 

(7) to declare an interest in a proposed transaction with the company.

 

•    The New Articles state that the number of directors of the company shall be fixed from time to time by resolution adopted by the Rowan UK Board (but must not be less than three and not more than 15). The initial number of directors will be 10.

Classification of the Board of Directors

•    Delaware law permits the certificate of incorporation or a stockholder-adopted bylaw to provide that directors be divided into one, two or three classes, with the term of office of one class of directors to expire each year.

 

•    English law permits a company to provide for terms of different length for its directors.

 

•    The New Articles provide that the Rowan UK Board will be divided into three classes of

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

•    Rowan Delaware’s bylaws provide that the Board will be divided into three classes of directors, each class is elected to serve for a term of three years, with the term of only one class expiring every year.

 

directors, and each class is elected to serve for a term of three years, with the term of only one class expiring every year.

 

•    If the declassification proposal is approved, the Rowan UK Board will be declassified over a three year period, beginning in 2013. The directors elected at the 2013 annual general meeting of Rowan UK (and each annual general meeting thereafter) will be elected for one-year terms, and beginning with the 2015 annual general meeting of Rowan UK, the entire Rowan UK Board will be elected annually.

Removal of Directors

•    Delaware law provides that a director or the entire board of directors may be removed with or without cause by the holders of a majority of the shares entitled to vote at an election of directors, except that:

 

(1) shareholders of a classified board of directors may be removed only for cause, unless the certificate of incorporation provides otherwise; and

 

(2) directors may not be removed in certain situations in the case of a corporation having cumulative voting.

 

•    Under Rowan Delaware’s certificate of incorporation and bylaws, a director of the company may be removed only with cause.

 

•    Under English law, shareholders may remove a director without cause by ordinary resolution, irrespective of any provisions in the company’s articles of association, provided that 28 clear days’ notice of the resolution is given to the company. Holders of ADS may have to surrender their ADS and withdraw their Class A Ordinary Shares in order to exercise their rights to remove directors.

 

•    Unless otherwise provided in the articles of association, the director has a right to make written representations, which the company must circulate to shareholders, as to why he or she should not be removed. This right is not excluded by the New Articles.

Vacancies on the Board of Directors
Vacancies, Generally  

•    Under Delaware law, unless otherwise provided in the certificate of incorporation or the bylaws:

 

(1) vacancies on a board of directors; and

 

(2) newly created directorships resulting from an increase in the number of directors may be filled by a majority of the directors in office, although less than a quorum, or by a sole remaining director. In the case of a classified board, directors elected to fill vacancies or newly created directorships will hold office until the next election of the class for which the directors have been chosen. If, at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the

 

•    The New Articles provide that:

 

(1) any vacancies on the Rowan UK Board; or

 

(2) any newly created directorships,

 

shall be filled by the majority vote of the remaining directors of all classes, whether or not a quorum, or by a sole remaining director. If there are, however, no directors in office, a shareholder may convene a general meeting for the purpose of appointing directors.

 

•    Shareholders also have a right to propose directors for appointment at a general

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

whole board, the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10 percent of the voting stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office.

 

•    Under Delaware law, unless otherwise provided in the certificate of incorporation or the bylaws, when one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

 

•    Rowan Delaware’s certificate of incorporation and bylaws both provide that:

 

(1) any vacancies on the Board; or

 

(2) newly created directorships, shall be filled by the majority vote of the remaining directors of that class classes, or if none, then by a majority of the remaining directors or, if applicable, by the sole remaining director. If there are no directors in office, then an election of directors may be held in the manner provided by statute.

 

meeting convened by the Rowan UK Board for such purpose, provided the shareholder(s) comply with the relevant procedural requirements. Holders of ADS may have to surrender their ADS and withdraw their Class A Ordinary Shares in order to exercise their rights to propose directors for appointment at a general meeting. See “Shareholder Proposals and Shareholder Nominations of Directors” and “Special Meetings of Shareholders” above.

Term of Service After Appointment to Fill a Vacancy  

 

•    Rowan Delaware’s certificate of incorporation and bylaws further provide that any director appointed to fill a vacancy shall serve for the remainder of the then present term of office of the class to which he or she was appointed.

 

•    The New Articles provide that any director appointed to fill a vacancy shall serve for the remainder of the then present term of office of the class to which he or she was appointed. In the event such term extends beyond the next annual general meeting of shareholders for which a definitive proxy statement has not been filed at the time of the appointment, the director or directors so appointed shall be named and described in the next definitive annual general meeting proxy statement and shall stand for election

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

 

 

for the remaining portion of the term of office at the annual general meeting of shareholders subject to said proxy statement.

 

•    The New Articles also provide that in the event of any change in the authorized number of directors, the newly created or eliminated directorships resulting from such increase or decrease shall, if the Rowan UK Board remains classified, be apportioned by the Rowan UK Board among the classes of directors so as to maintain such classes as nearly equal as possible.

Impact on Classification of the Board  

 

•    Rowan Delaware’s certificate of incorporation and bylaws also provide that in the event of any change in the authorized number of directors, the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board among the classes of directors so as to maintain such classes as nearly equal as possible.

 

•    The New Articles provide, if the Rowan UK Board remains classified, for the same apportionment among the classes of directors.

Liability of Directors and Officers

•    Delaware law permits a corporation’s certificate of incorporation to include a provision eliminating or limiting the personal liability of a director to the corporation and its stockholders for damages arising from a breach of fiduciary duty as a director. However, no provision can limit the liability of a director for:

 

(1) any breach of his or her duty of loyalty to the corporation or its stockholders;

 

(2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

 

(3) intentional or negligent payment of unlawful dividends or stock purchases or redemptions; or

 

(4) any transaction from which he or she derives an improper personal benefit.

 

•    Rowan Delaware’s certificate of incorporation provides that a director of the

 

•    English law does not permit a company to exempt any director or certain officers from any liability arising from negligence, default, breach of duty or breach of trust against the company. However, despite this prohibition, an English company is permitted to purchase and maintain insurance for a director or executive officer of the company against any such liability.

 

•    Shareholders can ratify by ordinary resolution a director’s or certain officer’s conduct amounting to negligence, default, breach of duty or breach of trust in relation to the company.

 

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Rowan UK Shareholders

company will not be personally liable to the company or its stockholders for monetary damages for breach of fiduciary duty as a director. However, a director will be liable (i) for any breach of the director’s duty of loyalty, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which such director derived an improper personal benefit.

 
Indemnification of Directors and Officers

•    Delaware law provides that a corporation may indemnify a person who is made a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding on account of being a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person:

 

(1) acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation; and

 

(2) in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

 

•    Rowan Delaware’s bylaws provide that the company will indemnify, to the fullest extent permitted by Delaware law, members of the Board and officers of the company from and against all expenses, liabilities or losses reasonably incurred or suffered. Further, the company may purchase and maintain insurance to effect indemnification.

 

•    Subject to exceptions, English law does not permit a company to exempt a director or certain officers from, or indemnify a director against, liability in connection with any negligence, default, breach of duty or breach of trust by a director in relation to the company.

 

•    The exceptions allow a company to:

 

(1) purchase and maintain director and officer insurance, or “D&O Insurance” against any liability attaching in connection with any negligence, default, breach of duty or breach of trust owed to the company. D&O Insurance generally covers costs incurred in defending allegations and compensatory damages that are awarded. However, D&O Insurance will not cover losses incurred in relation to criminal acts, intentional malfeasance or other forms of dishonesty, regulatory offences or excluded matters such as environmental fines and clean-up costs. In relation to these matters, D&O Insurance generally only covers defense costs, subject to the obligation of the director or officer to repay the costs if an allegation of criminality, dishonesty or intentional malfeasance is subsequently admitted or found to be true; and

 

(2) provide a qualifying third party indemnity provision, or “QTPIP.” This permits a company to indemnify its directors and certain officers (and directors and certain officers of an associated company) in respect of proceedings brought by third parties (covering both legal costs and the amount of any adverse judgment, except for: the legal costs of an unsuccessful defense of criminal proceedings or

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

 

civil proceedings brought by the company itself; fines imposed in criminal proceedings; and penalties imposed by regulatory bodies). Rowan UK can therefore indemnify directors and certain officers against such third party actions as class actions or actions following mergers and acquisitions or share issuances; and

 

(3) indemnify a director or certain officers in respect of defense costs in relation to civil and criminal proceedings against him or her (even if the action is brought by the company itself). This is subject to the requirement for the director or officer to reimburse the company if the defense is unsuccessful. However, if the company has a QTPIP in place whereby the director or officer is indemnified in respect of legal costs in civil proceedings brought by third parties, then the director or officer will not be required to reimburse the company.

 

•    The New Articles include a provision requiring the company to indemnify to any extent permitted by law any person who is or was a director or officer of any associated company, directly or indirectly (including by funding any expenditure incurred or to be incurred by him or her) against any loss or liability, whether in connection with any negligence, default, breach of duty or breach of trust by him or her or otherwise, in relation to the company or any associated company. The New Articles go on to state that where a person is so indemnified, such indemnity may extend to all costs, losses, expenses and liabilities incurred by him or her.

 

•    In addition to the provisions of the New Articles, it is common to set out the terms of the QTPIP in the form of a deed of indemnity between the company and the relevant director or officer which essentially indemnifies the director or officer against claims brought by third parties to the fullest extent permitted under English law. We expect to enter into new indemnification agreements and deeds of indemnity with directors, executive officers and certain other officers and employees (including directors, officers and employees of subsidiaries and other affiliates). See “Proposal 1—Approval of the Adoption of the Merger Agreement—Additional Agreements.”

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

 

 

•    Rowan UK will be required to disclose in its annual directors’ report any QTPIP in force at any point during the relevant financial year or in force when the directors’ report is approved. A copy of the indemnity or, if it is not in writing, a memorandum setting out its terms must be open to inspection during the life of the indemnity and for a period of one year from the date of its termination or expiration. Any shareholder may inspect the indemnity, or memorandum, without charge or may request a copy on payment of a fee.

Shareholders’ Suits

•    Under Delaware law, a stockholder may initiate a derivative action to enforce a right of a corporation if the corporation fails to enforce the right itself. The complaint must:

 

(1) state that the plaintiff was a stockholder at the time of the transaction of which the plaintiff complains or that the plaintiff’s shares thereafter devolved on the plaintiff by operation of law; and

 

(2)(A) allege with particularity the efforts made by the plaintiff to obtain the action the plaintiff desires from the directors; or

 

(B) state the reasons for the plaintiff’s failure to obtain the action or for not making the effort.

 

•    Additionally, the plaintiff must remain a stockholder through the duration of the derivative suit. The action will not be dismissed or compromised without the approval of the Delaware Court of Chancery.

 

•    An individual may also commence a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining a class action under Delaware law have been met.

 

•    While English law only permits a shareholder to initiate a lawsuit on behalf of the company in limited circumstances, it does permit a shareholder whose name is on the register of shareholders of Rowan UK to apply for a court order:

 

(1) when Rowan UK’s affairs are being or have been conducted in a manner unfairly prejudicial to the interests of all or some shareholders, including the shareholder making the claim; or

 

(2) when any act or omission of Rowan UK is or would be so prejudicial.

 

•    The New Articles provide that English courts will have exclusive jurisdiction with respect to any suits brought by shareholders against Rowan UK or its directors.

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

Share Acquisitions

•    Section 203 of the Delaware General Corporation Law prohibits “business combinations.” A corporation shall not engage in any business combination with any interested stockholder for a period of three years following the time that such stockholder became an interested stockholder, unless:

 

(1) Prior to such time the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

 

(2) Upon the consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder held at least 85 percent of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

 

(3) At or subsequent to such time the business combination was approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3 percent of the outstanding voting stock which is not owned by the interested stockholder.

 

•    No comparable provision.

Mandatory Offers

•    No comparable provision.

 

•    If Proposal 2 is approved, then, except with the consent of the Rowan UK Board or the prior approval of the shareholders, a shareholder, together with persons acting in concert, would be at risk of certain Rowan UK Board sanctions if they acquired more than a 30 percent shareholding in Rowan UK without making an offer for all of the other issued shares that is in cash or accompanied by a cash alternative. See “Description of Class A Ordinary Shares of Rowan UK—Mandatory Offers.”

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

Anti-Takeover Matters

•    A Delaware court will generally uphold board of director decisions to adopt anti-takeover measures, such as shareholder rights plans, in the face of a potential takeover where the directors are able to show that:

 

(1) they had reasonable grounds for believing that there was a danger to corporate policy and effectiveness from an acquisition proposal; and

 

(2) the board action taken was reasonable in relation to the threat posed.

 

•    English law does not expressly prohibit anti-takeover measures, such as shareholder rights plans. The New Articles provide that the Rowan UK Board may adopt a shareholder rights plan at any time, subject to compliance with their fiduciary duties.

 

See “Description of Class A Ordinary Shares of Rowan UK—Anti-takeover Provisions.”

Disclosure of Interests

•    Certain acquisitions of shares of common stock of Rowan Delaware may require disclosure under the Exchange Act on Schedule 13D. Some acquisitions, however, may qualify for a short-form disclosure on Schedule 13G. Generally, an acquisition of more than a five percent interest in a U.S. publicly-held issuer by:

 

(1) certain types of persons, including a broker-dealer, a bank, an insurance company, an investment company and an investment advisor, or

 

(2) a “passive investor” who is not seeking to acquire or influence control of the issuer, so long as the investor owns less than 20 percent of the class of stock it is acquiring.

 

May be disclosed on a Schedule 13G.

 

•    A buyer who files a Schedule 13G must amend it periodically:

 

(1) to report any change in the information previously reported; or

 

(2) if it acquires more than 10 percent of the class of stock and, thereafter, if it undergoes any change in ownership of five percent or more of the class of stock.

 

•    After the effective time of the merger, the Schedule 13D and Schedule 13G reporting regime will continue to apply to Rowan UK as it will have its shares registered under Section 12 of the Exchange Act.

 

•    In addition, English law provides that a company may, by notice in writing, require a person whom the company knows or reasonably believes to be or to have been within the three preceding years, interested in its issued voting share capital to:

 

(1) confirm whether this is or is not the case; and

 

(2) if this is the case, to give further information that it requires relating to his or her interest and any other interest in the company’s shares of which he or she is aware.

 

The disclosure must be made within a reasonable period as specified in the relevant notice which may be as short as one or two days.

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

Limitation on Enforceability of Civil Liabilities Under U.S. Federal Securities Laws
Ability to Bring Suits, Enforce Judgments and Enforce U.S. Law

•    Rowan Delaware is a U.S. company incorporated under the laws of Delaware and has substantial assets located in the U.S. As a result, investors generally can initiate lawsuits in the U.S. against Rowan Delaware and its directors and officers and can enforce lawsuits based on U.S. federal securities laws in U.S. courts.

 

•    As a company listed on the NYSE, Rowan UK and its directors and officers will be subject to U.S. federal securities laws, and investors could initiate civil lawsuits in the U.S. against Rowan UK for breaches of the U.S. federal securities laws.

 

•    Because Rowan UK will be a public limited company incorporated under English law after the effective time of the merger, investors could experience more difficulty enforcing judgments obtained against Rowan UK in U.S. courts than would currently be the case for U.S. judgments obtained against Rowan Delaware. In addition, it may be more difficult (or impossible) to bring some types of claims against Rowan UK in courts sitting in England than it would be to bring similar claims against a U.S. company in a U.S. court. In addition, the New Articles will provide that English courts have exclusive jurisdiction with respect to any suits brought by shareholders against Rowan UK or its directors.

 

•    A judgment obtained against Rowan UK from a U.S. court will not be recognized by the English courts but an action may be commenced in the English courts for an amount due under a judgment given by the U.S. courts if that judgment is (a) for a debt or definite sum of money; (b) final and conclusive; and (c) not of a penalty or revenue nature. A judgment may be impeached by showing that: (i) the court in question did not, in the circumstances of the case, and in accordance with the English rules of private international law, have jurisdiction to give that judgment; (ii) the judgment was obtained through fraud; (iii) the enforcement of the judgment would be contrary to the public policy of the U.K.; or (iv) the proceedings in which the judgment was obtained were opposed to the rules of natural justice.

 

•    Rowan UK and its directors and officers may be subject to criminal penalties in the U.S. arising from breaches of the U.S. federal securities laws, but may not be subject to criminal penalties in the U.K. unless the criminal laws of the U.K. were violated.

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

 

 

•    A criminal judgment in a U.S. court under U.S. federal securities laws may not be enforceable in the English courts on public policy grounds and a prosecution brought before the English courts under U.S. federal securities laws might not be permitted on public policy grounds.

Short Swing Profits

•    Directors and officers of Rowan Delaware are governed by rules under the Exchange Act that may require directors and officers to forfeit to Rowan Delaware any “short swing” profits realized from purchases and sales, as determined under the Exchange Act and the rules thereunder, of Rowan Delaware equity securities.

 

•    As a company listed on the NYSE and subject to the Exchange Act, directors and officers of Rowan UK would be subject to the U.S. securities laws, including the prohibitions on “short swing” trading.

Proxy Statements and Reports
Notices and Reports to Shareholders; Matters to Include
Proxy Statements Generally  

•    Under the Exchange Act proxy rules, Rowan Delaware must comply with notice and disclosure requirements relating to the solicitation of proxies for stockholder meetings.

 

•    The Exchange Act proxy rules will continue to apply to Rowan UK, unless there are further changes in the Company as described in “Effect of the Merger on Potential Future Status as a Foreign Private Issuer.”

 

•    English law does not have specific proxy solicitation legislation, but approaches to shareholders may need to comply with the U.K. Financial Services and Markets Act 2000.

 

•    The New Articles provide that each shareholder is entitled to vote in person or by proxy for each share of the capital stock having voting power held by such shareholder, but no proxy shall be voted on after three years from its date unless the proxy provides for a longer period.

 

•    Rowan UK may provide means, including via the Internet or by means of a telephonically communicated datagram, for the receipt of any document or information relating to proxies.

 

•    Because shares of Rowan UK will trade on the NYSE in ADS form only, Rowan UK will not be required to prepare and submit for shareholder approval a directors’ remuneration report.

 
Voting by Proxy  

•    Rowan Delaware’s bylaws provide that each stockholder is entitled to vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.

 

Approval of Director Compensation

 

•    Rowan Delaware’s stockholders generally do not have the right to approve directors’ compensation; however, Rowan Delaware is subject to SEC reporting requirements for director and executive

 

 

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Rowan Delaware Stockholders

 

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Rowan UK Shareholders

officer compensation and shareholder non-binding advisory votes to approve named executive officer compensation and to determine the frequency of such non-binding advisory votes.

 

Rowan UK will remain subject to SEC reporting requirements for director and executive officer compensation and shareholder non-binding advisory votes to approve named executive officer compensation and to determine the frequency of such non-binding advisory votes.

 

•    English law requires, in the case of officers who are also considered directors under English law, that employment agreements with a guaranteed term of more than two years be subject to a prior approval of shareholders at a general meeting.

Approval of Auditors  

•    Rowan Delaware’s stockholders do not have the right to appoint the company’s auditors; however, Rowan Delaware typically includes in its proxy statement a shareholder proposal to ratify the appointment of its auditors.

 

•    Under English law, Rowan UK’s shareholders approve the company’s auditors each year. In addition, the company’s annual financial statements, which must, to the satisfaction of the Rowan UK Board, give a “true and fair view” of the assets, liabilities, financial position and profit or loss of Rowan UK and the consolidated group, must be presented to the shareholders at a general meeting but are not required to be approved by the shareholders.

Notice  

•    Rowan Delaware’s bylaws provide that whenever notice is required to be given to any stockholder, such notice may be given in writing, by mail, addressed to such stockholder, at his or her address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the U.S. mail.

 

•    The New Articles provide that whenever notice is required to be given to any shareholder, such notice may be given in writing:

 

(1) personally;

 

(2) by mail, addressed to such shareholder, at his or her address as it appears on the records of the company, with postage thereon prepaid;

 

(3) by sending it in electronic form (if the shareholder has so agreed); or

 

(4) in certain circumstances, by making the notice available on a website.

 

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Rowan Delaware Stockholders

 

Provisions Applicable to

Rowan UK Shareholders

Reporting Requirements

•    As a U.S. public company, Rowan Delaware must file with the SEC, among other reports and notices:

 

(1) an Annual Report on Form 10-K within 60 days after the end of a fiscal year;

 

(2) a Quarterly Report on Form 10-Q within 40 days after the end of a fiscal quarter ending; and

 

(3) Current Reports on Form 8-K upon the occurrence of certain important corporate events. Unless otherwise specified, a report is to be filed or furnished within four business days after occurrence of the event.

 

•    Since Rowan UK would be considered a successor issuer to Rowan Delaware and would be listed on the NYSE, Rowan UK would remain subject to U.S. securities laws, but would not be subject to the reporting obligations of companies listed on the London Stock Exchange or on any other securities exchange.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth, as of February 15, 2012, information with respect to shares of common stock of Rowan Delaware beneficially owned by each person or group known by us to own more than five percent of the outstanding shares of common stock of Rowan Delaware:

 

Name and Address of Beneficial Owner

   Shares Beneficially
Owned
     Percent of Class  (1)  

BlackRock, Inc. (2)

     10,731,399         8.68

40 East 52nd Street

     

New York, NY 10022

     

FMR LLC (3)

     8,575,730         6.94

82 Devonshire Street

     

Boston, Massachusetts 02109

     

The Vanguard Group, Inc. (4)

     6,724,310         5.44

100 Vanguard Boulevard

     

Malvern, PA 19355

     

First Pacific Advisors, LLC (5)

     6,719,900         5.44

11400 West Olympic Boulevard, Suite 1200

     

Los Angeles, CA 90064

     

State Street Corporation (6)

     6,224,600         5.04

State Street Financial Center

     

One Lincoln Street

     

Boston, MA 02111

     

 

(1) Based on 123,578,642 shares of common stock of Rowan Delaware outstanding as of January 31, 2012.
(2) As reported on Schedule 13G/A (filed with the SEC on February 10, 2012) by BlackRock, Inc. and certain of its subsidiaries. BlackRock reports sole investment and sole dispositive power over all shares reported above.
(3) As reported on Schedule 13G (filed with the SEC on February 14, 2012) by FMR LLC, a parent holding company. FMR LLC is the beneficial owner of all 8,575,730 shares, has sole dispositive power over all 8,575,730 shares and has sole voting power over 1,928,990 shares. Edward C. Johnson III serves as Chairman of FMR LLC. Members of the Edward C. Johnson III family own shares of common stock representing approximately 49 percent of the voting power of FMR LLC. Mr. Johnson and members of his family may be deemed to form a controlling group with respect to the common voting stock of FMR LLC. Of these 8,575,730 shares, 6,638,140 shares are beneficially owned by Fidelity Management & Research Company, an investment advisor and a wholly owned subsidiary of FMR LLC; 40,217 shares are beneficially owned by Fidelity Management Trust Company, a bank as defined in Section 3(a)(6) of the Exchange Act and wholly owned subsidiary of FMR LLC; 4,340 shares are beneficially owned by Strategic Advisers, Inc., an investment advisor and wholly owned subsidiary of FMR LLC; 23,610 shares are beneficially owned by Pyramis Global Advisors, LLC, an investment advisor and indirect wholly owned subsidiary of FMR LLC; and 1,177,990 shares are beneficially owned by Pyramis Global Advisors Trust Company, a bank as defined in Section 3(a)(6) of the Exchange Act. FIL Limited (“FIL”), Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, and various foreign-based subsidiaries provide investment advisory and management services to a number of non-U.S. investment companies and certain institutional investors. FIL, which is a qualified institution under Section 13(d)(1) of the Exchange Act, is the beneficial owner of 691,433 shares. Partnerships controlled predominantly by members of the family of Edward C. Johnson 3d, Chairman of FMR LLC and FIL, or trusts for their benefit, own shares of FIL voting stock. While the percentage of total voting power represented by these shares may fluctuate as a result of changes in the total number of shares of FIL voting stock outstanding from time to time, it normally represents more than 25 percent and less than 50 percent of the total votes which may be cast by all holders of FIL voting stock. FMR LLC and FIL are separate and independent corporate entities, and their Boards of Directors are generally composed of different individuals. FMR LLC and FIL are of the view that they are not acting as a “group” for purposes of Section 13(d) of the Exchange Act.

 

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(4) As reported on Schedule 13G (filed with the SEC on February 10, 2012) by The Vanguard Group, Inc. and certain of its subsidiaries (“Vanguard”). Vanguard reports sole voting power over 176,624 shares, sole dispositive power over 6,547,686 shares and shared dispositive power over 176,624 shares.
(5) As reported on Schedule 13G (filed with the SEC on February 14, 2012) by First Pacific Advisors, LLC (“FPA”), Robert L. Rodriguez, Managing Member of FPA, J. Richard Atwood, Managing Member of FPA and Steven T. Romick, Managing Member of FPA. FPA, in its capacity as investment advisor to its various clients, may be deemed to be the beneficial owner of the shares reported above, as in its capacity as investment advisor it has shared voting power over 2,763,500 shares and the power to dispose or direct the disposition of all shares of the issuer owned by its clients. Each of Messrs. Rodriguez, Atwood and Romick, as part-owners and Managing Members of FPA, is a controlling person of FPA and may be deemed to beneficially own such shares, and each disclaims beneficial ownership of such shares.
(6) As reported on Schedule 13G (filed with the SEC on February 13, 2012) by State Street Corporation, acting in various fiduciary capacities. The reporting person has shared voting and dispositive power of the shares reported above, and disclaims beneficial ownership of such shares.

 

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SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of January 31, 2012, information with respect to shares of common stock of Rowan Delaware beneficially owned by each director, by each of our executive officers who are identified as “named executive officers” in the proxy statement for our 2011 Annual Meeting of Stockholders, and by all of our directors and executive officers as a group.

 

Executive Officers and Directors

   Shares  Beneficially
Owned (1)
    Percent of Class  (2)  

W. Matt Ralls

     477,323        —  (3) 

President and Chief Executive Officer, Director

    

Thomas P. Burke

     29,621        —  (3) 

Chief Operating Officer

    

Mark A. Keller,

     304,865        —  (3) 

Senior Vice President, Business Development

    

John L. Buvens

     213,651        —  (3) 

Executive Vice President, Legal

    

William H. Wells

     180,243        —  (3) 

Senior Vice President and Chief Financial Officer

    

R.G. Croyle

     51,493        —  (3) 

Director

    

William T. Fox III

     40,057        —  (3) 

Director

    

Sir Graham Hearne

     32,890        —  (3) 

Director

    

Thomas R. Hix

     11,888        —  (3) 

Director

    

Robert E. Kramek

     18,015        —  (3) 

Director

    

Frederick R. Lausen

     54,057        —  (3) 

Director

    

H.E. Lentz

     70,157        —  (3) 

Chairman of the Board

    

Lord Moynihan

     38,057        —  (3) 

Director

    

Suzanne P. Nimocks

     4,157        —  (3) 

Director

    

P. Dexter Peacock

     35,390        —  (3) 

Director

    

John J. Quicke

     12,888        —  (3) 

Director

    

All directors and executive officers as a group

     1,790,881        1.44

(20 persons, including those named above)

    

David P. Russell

     54,227  (4)      —  (3) 

Former Executive Vice President, Drilling Operations (4)

    

 

(1) Includes shares immediately issuable upon exercise of stock options as of January 31, 2012, shares issuable upon exercise of stock options that vest within 60 days of January 31, 2012, and/or restricted stock units that vest within 60 days of January 31, 2012, other than Mr. Burke, whose shares are not restricted.
(2) Based on 123,578,642 shares of common stock of Rowan Delaware outstanding on January 31, 2012.
(3) Ownership of less than 1 percent of the outstanding shares of common stock of Rowan Delaware.
(4) Mr. Russell resigned as an executive officer on July 28, 2011. Beneficial ownership information is as of May 5, 2011, the date of filing of Mr. Russell’s most recent Form 4.

 

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LEGAL MATTERS

Baker & McKenzie LLP (U.S.) has advised us in connection with certain U.S. legal matters with respect to the merger and Baker & McKenzie LLP (U.K.) has advised us in connection with certain U.K. legal matters with respect to the merger, including legal matters with respect to the validity of the Class A Ordinary Shares represented by the ADS to be issued pursuant to the merger.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The consolidated financial statements incorporated in this proxy statement/prospectus by reference from Rowan Delaware’s Annual Report on Form 10-K for the year ended December 31, 2011, and the effectiveness of Rowan Delaware’s internal control over financial reporting have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports which (i) express an unqualified opinion on the financial statements and include an explanatory paragraph referring to the Rowan Delaware’s completed sale of its wholly owned manufacturing subsidiary, LeTourneau Technologies, Inc., and land drilling services business on June 22, 2011, and September 1, 2011, respectively, and (ii) express an unqualified opinion on the effectiveness of internal control over financial reporting, which are incorporated herein by reference. Such consolidated financial statements have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

Rowan Delaware is subject to the informational requirements of the Exchange Act and in accordance therewith files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Rowan Delaware’s SEC filings also are available to the public from commercial document retrieval services and at the SEC’s website at www.sec.gov. You may also inspect those reports, proxy statements and other information concerning Rowan Delaware at the offices of the NYSE, 20 Broad Street, New York, New York 10005, on which the Rowan Delaware common stock is currently listed.

Rowan UK has filed a Registration Statement on Form S-4 with the SEC to register its Class A Ordinary Shares underlying the ADS in connection with the merger. This proxy statement/prospectus is a part of that registration statement and constitutes a prospectus of Rowan UK under applicable U.S. securities laws in addition to being the proxy statement of Rowan Delaware for the special meeting. This proxy statement/prospectus is not intended to be and is not a prospectus for purposes of the E.U. Prospectus Directive and/or the U.K. Financial Services Authority’s Prospectus Rules. A registration statement on Form F-6 in respect of the ADS has also been filed with the SEC.

In addition to the information set forth in this proxy statement/prospectus, SEC rules allow Rowan Delaware and Rowan UK to “incorporate by reference” information into this proxy statement/prospectus, which means that Rowan Delaware can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement/prospectus, except for any information therein that is superseded by information set forth in this proxy statement/prospectus. We incorporate by reference the documents listed below and any additional documents that we will file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (excluding any information or exhibits “furnished” to but not “filed”) following the date of this document, but prior to the date of the special meeting. These documents contain important information about Rowan Delaware. The documents incorporated by reference are

 

  1. Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 28, 2012;

 

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  2. Proxy Statement on Schedule 14A, filed with the SEC on March 14, 2011; and

 

  3. Current Report on Form 8-K filed with the SEC on February 28, 2012.

If you are a stockholder of record or beneficial owner, we may already have sent you some of the documents incorporated by reference, but you can obtain any of them from us or the SEC. Stockholders of record, beneficial owners, and any other person to whom a proxy statement is delivered may obtain without charge a copy of documents that we incorporate by reference into this proxy statement/prospectus (including exhibits, but only if specifically requested) by requesting them by telephone at (713) 621-7800 or in writing at the following address:

Rowan Companies, Inc.

Attn: Investor Relations Department

2800 Post Oak Boulevard, Suite 5450

Houston, Texas 77056

If you would like to request documents from us, please do so no later than five business days prior to the date of the special meeting to assure that you will receive them before the special meeting.

You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus to consider and vote upon the proposals herein. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement/prospectus. The date of this proxy statement/prospectus can be found on the first page. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date, and neither the mailing of this proxy statement/prospectus to our stockholders nor the issuance of ADS representing Class A Ordinary Shares in the merger shall create any implication to the contrary.

OTHER INFORMATION

Stockholder Proposals for Next Annual Meeting (if the adoption of merger agreement is not approved)

If the proposal to approve the adoption of merger agreement is not approved by our stockholders, any of our stockholders intending to present a proposal at the 2012 annual meeting of Rowan Companies, Inc. must have delivered such proposal to our principal executive offices, in writing and in accordance with SEC Rule 14a-8, no later than November 16, 2011, for inclusion in the proxy statement related to that meeting. The proposal should be delivered to our Secretary by certified mail, return receipt requested.

If a stockholder wishes to submit a proposal outside of the process of Rule 14a-8 under the Exchange Act, the proposal must have been received at the above address no later than January 30, 2012, to be considered “timely” for the purposes of Rule 14a-4(c) under the Exchange Act. In addition, our bylaws require that proposals of stockholders made outside of SEC Rule 14a-8 and nominations for the election of directors at the 2012 Annual Meeting of Stockholders must have been submitted, in accordance with the requirements of our bylaws, no earlier than December 30, 2011, nor later than January 29, 2012. Stockholders are also advised to review our bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.

Information Concerning Stockholder Proposals Made at the Special Meeting

According to Article II, Sections 7 and 10 of Rowan Delaware’s bylaws, business transacted at any special meeting of stockholders is limited to the purposes stated in the notice of such special meeting. Therefore, no stockholder may present a proposal at the special meeting.

 

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Shareholder Proposals After the Merger

If the merger is approved, Rowan UK will become the successor issuer of Rowan Delaware for purposes of U.S. securities laws. Shareholder proposals to be included in the proxy materials for our general meeting at which directors will be elected to be held in 2012 must have been received by us by November 16, 2011, and must otherwise comply with Rule 14a-8 promulgated by the SEC to be considered for inclusion in our proxy statement for that year. If you do not comply with Rule 14a-8, we will not be required to include the proposal in our proxy statement and the proxy card mailed to our shareholders.

If you desire to bring a matter before a meeting of the shareholders of Rowan UK and the proposal is submitted outside the process of Rule 14a-8, a shareholder must follow the procedures set out under the Companies Act, the New Articles of Rowan UK and the deposit agreement, which may require you to surrender the ADS and withdraw the Class A Ordinary Shares.

Communications to the Board

The Board has adopted the following process for stockholders and other interested parties to send communications to members of the Board. Stockholders and other interested parties may communicate with the Chairman, the chairs of the Audit, Compensation, and Nominating and Corporate Governance Committees of the Board, or with any of our other independent directors, by sending a letter to the following address: Rowan Companies, Inc., c/o Corporate Secretary, 2800 Post Oak Boulevard, Suite 5450, Houston, Texas 77056.

Householding of Proxy Materials

We participate, and some brokers, banks, trusts and other nominee record holders may be participating, in the practice of “householding” proxy materials. This procedure allows multiple stockholders residing at the same address the convenience of receiving a single proxy statement/prospectus and any other proxy materials. You may request a separate copy of the proxy statement/prospectus by calling 1-800-579-1639, by using the website www.proxyvote.com, by e-mail at sendmaterial@proxyvote.com, or by writing us at Rowan Companies, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

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ANNEX A

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

This Agreement and Plan of Merger and Reorganization (this “Agreement”) is entered into as of February 27, 2012, by and between Rowan Companies, Inc., a Delaware corporation (“Rowan Delaware”), and Rowan Mergeco, LLC, a Delaware limited liability company and wholly owned subsidiary of Rowan Delaware (“Rowan Mergeco”).

PRELIMINARY STATEMENTS

A. The Board of Directors of Rowan Delaware (the “Board”) has unanimously determined that it is advisable and in the best interests of Rowan Delaware’s stockholders to reorganize the corporate structure of Rowan Delaware and the group of companies it controls (the “restructuring”), whereby, among other transactions, Rowan Mergeco will merge with and into Rowan Delaware with Rowan Delaware as the surviving corporation (the “Merger”).

B. The Board has unanimously approved the Merger, this Agreement and, to the extent applicable to Rowan Delaware, the other transactions described herein or contemplated hereby, pursuant to which Rowan Delaware will be the surviving corporation in the Merger and will become an indirect, wholly owned subsidiary of Rowan UK (as defined below), all upon the terms and subject to the conditions set forth in this Agreement, and whereby each outstanding share of common stock, par value US$0.125 per share, of Rowan Delaware (“Rowan Delaware Common Stock”), other than those shares of Rowan Delaware Common Stock held by Rowan Delaware in treasury or by any subsidiaries of Rowan Delaware (other than any shares held for the benefit of any employee or director benefit plan), shall be converted into the right to receive one American depositary share (each, an “ADS,” and, collectively, the “ADS”), each of which represents one Class A Ordinary Share, par value US$0.125 per share (collectively, the “Class A Ordinary Shares”), and is evidenced by an American depositary receipt (an “ADR”), of Rowan Companies Limited, a newly formed English private limited company, which, prior to the Effective Time (as defined below), will re-register as an English public limited company named “Rowan Companies, plc” (“Rowan UK”).

C. The sole member of Rowan Mergeco has approved the Merger, this Agreement and, to the extent applicable, the other transactions described herein or contemplated hereby.

D. The Merger requires, among other things, the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Rowan Delaware Common Stock entitled to vote thereon.

E. Rowan Delaware and Rowan Mergeco intend for the Merger to qualify as a reorganization under Section 368(a) and/or an exchange under Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury regulations promulgated thereunder (the “Treasury Regulations”).

F. Rowan Delaware and Rowan Mergeco further intend for this Agreement to constitute a plan of reorganization within the meaning of Section 368 of the Code and Treasury Regulations thereunder.

AGREEMENT

In consideration of the foregoing and of the covenants and agreements contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

THE MERGER

Section 1.1 The Merger. Subject to the terms and conditions of this Agreement, and in accordance with the Delaware General Corporation Law (the “DGCL”), at the Effective Time Rowan Mergeco shall merge with and

 

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into Rowan Delaware in accordance with this Agreement and the separate corporate existence of Rowan Mergeco shall thereupon cease. From and after the Effective Time and in accordance with the DGCL, (a) Rowan Delaware shall continue as the surviving corporation in the Merger (sometimes hereinafter referred to as the “Surviving Corporation”), becoming an indirect, wholly owned subsidiary of Rowan UK, (b) the corporate identity, existence, powers, rights and immunities of Rowan Delaware as the Surviving Corporation shall continue unimpaired by the Merger, and (c) Rowan Delaware shall succeed to and shall possess all the assets, properties (real, personal and mixed), rights, privileges, powers, franchises, immunities and purposes of, and be subject to all the debts, liabilities, obligations, restrictions and duties of, Rowan Mergeco, all without further act or deed.

Section 1.2 Filing Certificate of Merger; Effective Time. As soon as practicable following the satisfaction or, to the extent permitted by applicable law or this Agreement, waiver of the conditions set forth in Article V, and if this Agreement shall not have been terminated as provided in Section 6.1, Rowan Mergeco and Rowan Delaware shall cause a certificate of merger (the “Certificate of Merger”) satisfying the requirements of Section 264(c) of the DGCL to be properly executed and filed in accordance with such section and otherwise make all other filings or recordings as required by the DGCL in connection with the Merger. Following the filing of the certificate of merger as provided above, the Merger shall become effective at 12:01 a.m., Eastern Time on the first business day after the stockholders of Rowan Delaware approve the adoption of this Agreement, or at such later date as the parties hereto shall agree (the “Effective Time”).

ARTICLE II

CHARTER DOCUMENTS;

DIRECTORS AND OFFICERS OF

SURVIVING CORPORATION

Section 2.1 Name of the Surviving Corporation. The name of the Surviving Corporation shall be “Rowan Companies, Inc.”

Section 2.2 Certificate of Incorporation of the Surviving Corporation. From and after the Effective Time, the Certificate of Incorporation of Rowan Delaware in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation, until duly amended in accordance with applicable law.

Section 2.3 Bylaws of Surviving Corporation. From and after the Effective Time, the Bylaws of Rowan Delaware in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation, until duly amended in accordance with applicable law.

Section 2.4 Directors of Surviving Corporation. From and after the Effective Time, the directors of Rowan Delaware immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each such director to serve in such capacity until his or her earlier death, resignation or removal or until his or her successor is duly elected or appointed.

Section 2.5 Officers of Surviving Corporation. From and after the Effective Time, the officers of Rowan Delaware immediately prior to the Effective Time shall be the officers of the Surviving Corporation, each such officer to serve in such capacity until his or her earlier death, resignation or removal or until his or her successor is duly elected or appointed.

 

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ARTICLE III

CANCELLATION AND CONVERSION OF STOCK

Section 3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any Rowan Delaware Common Stock, any membership interests in Rowan Mergeco, any Class A Ordinary Shares of Rowan UK, any Class B Ordinary Shares of Rowan UK or any ADS or ADRs of Rowan UK:

(a) Cancellation of Certain Rowan Delaware Common Stock. Each issued share of Rowan Delaware Common Stock that is owned by Rowan Delaware (as a treasury share or otherwise) or by any subsidiaries of Rowan Delaware (excluding, for the avoidance of doubt, any shares of Rowan Delaware Common Stock held in or for the benefit of any employee or director benefit plan such as a 401(k) plan or equity incentive plan) immediately prior to the Effective Time shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be delivered or deliverable hereunder in connection with such cancellation.

(b) Conversion of Remaining Rowan Delaware Common Stock. Subject to Section 3.2(l), each outstanding share of Rowan Delaware Common Stock (other than the issued shares of Rowan Delaware Common Stock referenced in Section 3.1(a)) shall be converted into and shall become the right to receive one validly issued, fully paid and nonassessable ADS, which, collectively with any other ADS received by a holder of shares of Rowan Delaware Common Stock, immediately after the Effective Time shall be represented by one or more ADRs.

(c) Conversion of Rowan Mergeco Membership Interests. All issued and outstanding membership interests in Rowan Mergeco shall be converted into one validly issued, fully paid and nonassessable share of common stock, par value US$0.125 per share, of the Surviving Corporation (the “Surviving Corporation Common Share”).

(d) Equity Incentive Plans. At the Effective Time, all outstanding options, stock appreciation rights, awards of restricted stock or restricted stock units or other rights to purchase, acquire or receive shares of Rowan Delaware Common Stock (or the right to receive benefits or amounts by reference to those shares) under any of Rowan Delaware’s equity incentive plans, compensation plans, and other benefit plans, agreements, awards and other similar arrangements (“Equity Plans”) shall be converted into options, stock appreciation rights, awards of restricted stock or restricted stock units or other rights to purchase, acquire, or receive ADS (or the right to receive benefits or amounts by reference to ADS), as applicable, on a one-for-one basis, as further described in Article 4 below.

(e) Class B Ordinary Shares of Rowan UK. Each issued and outstanding Class B Ordinary Share, nominal value £1.00 per share, of Rowan UK (“Class B Ordinary Shares”) immediately prior to the Effective Time shall remain outstanding, except that such shares shall have no voting rights or rights to dividends or distributions to the extent that they are held by Rowan Delaware.

Section 3.2 Surrender and Exchange of Shares.

(a) Following the date of this Agreement and in any event not less than three business days prior to the Effective Time, Rowan Delaware shall select a bank or trust company to act as exchange agent in connection with the Merger (including any successor, the “Exchange Agent”) for the purpose of exchanging certificates representing Rowan Delaware Common Stock (“Certificates”) for ADS or ADRs evidencing one or more ADS.

(b) The Exchange Agent shall act as the agent for each holder of shares of Rowan Delaware Common Stock to receive the ADS that such holder shall become entitled to receive with respect to such holder’s shares of Rowan Delaware Common Stock pursuant to this Article III.

 

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(c) Prior to the Effective Time, Rowan Mergeco or, after the Effective Time, the Surviving Corporation shall deposit or cause to be deposited with the Exchange Agent, from time to time, (i) such number of ADS and/or ADRs evidencing ADS, in such denominations as the Exchange Agent shall specify, as are deliverable pursuant to Section 3.1, and which, unless Rowan Mergeco or the Surviving Corporation shall otherwise determine, may be deposited with the Exchange Agent through the facilities of The Depository Trust Company (“DTC”), and (ii) the amount of cash that is payable pursuant to this Article III, in each case in respect of shares of Rowan Delaware Common Stock for which Certificates are expected to be properly delivered to the Exchange Agent.

(d) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each stockholder who was a stockholder of record immediately prior to the Effective Time of shares of Rowan Delaware Common Stock, a letter of transmittal, which shall specify that delivery shall be effected, and risk of loss and title to the Certificates held by such holder representing such shares of Rowan Delaware Common Stock shall pass, only upon actual and proper delivery of the Certificates to the Exchange Agent.

(e) Each holder of shares of Rowan Delaware Common Stock shall be entitled to receive in exchange for such holder’s shares of Rowan Delaware Common Stock, upon surrender to the Exchange Agent of one or more Certificates, together with a letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the number of whole ADS into which such holder’s shares of Rowan Delaware Common Stock represented by such holder’s properly surrendered Certificate(s) were converted in accordance with Section 3.1 and any cash dividends or other distributions that such holder has the right to receive pursuant to this Article III.

(f) If delivery of the ADS is to be made to a person other than the person in whose name a surrendered Certificate is registered, it shall be a condition of delivery that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment or delivery shall have (i) paid to the Exchange Agent any transfer and other taxes required by reason of the delivery of the ADS to a person other than the registered holder of the Certificate surrendered or (ii) shall have established to the satisfaction of the Exchange Agent that such tax either has been paid or is not applicable. Until so surrendered, each Certificate shall, after the Effective Time, represent for all purposes only the right to receive upon such surrender the applicable ADS as contemplated by this Article III and any cash dividends or other distributions that such holder has the right to receive pursuant to this Article III.

(g) At the Effective Time, the stock transfer books of Rowan Delaware shall be closed and thereafter there shall be no further registration of transfers of shares of Rowan Delaware Common Stock that were outstanding prior to the Effective Time. After the Effective Time, Certificates presented to the Exchange Agent shall be cancelled and exchanged for the consideration provided for, and in accordance with the procedures set forth, in this Article III.

(h) Any ADS to be delivered plus any cash dividend or other distribution that a former holder of shares of Rowan Delaware Common Stock has the right to receive pursuant to this Article III that remains unclaimed by any former holder of shares of Rowan Delaware Common Stock after the Effective Time shall be held by the Exchange Agent (or a successor agent appointed by the Surviving Corporation). None of the Surviving Corporation, Rowan UK, the Exchange Agent or any of their affiliates shall be liable to any former holder of shares of Rowan Delaware Common Stock for any securities properly delivered or any amount properly paid by the Exchange Agent or its nominee, as the case may be, to a public official pursuant to applicable abandoned property, escheat or similar law nine months after the Effective Time. If any Certificate has not been surrendered prior to the second anniversary of the Effective Time (or immediately prior to an earlier date on which the ADS in respect of the Certificate would otherwise escheat to or become the property of any governmental entity), any cash, share dividends and distributions otherwise payable in respect of the Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto.

 

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(i) Dividends or other distributions declared by Rowan UK after the Effective Time with respect to ADS deliverable with respect to the shares of Rowan Delaware Common Stock shall accrue, but shall not be paid to the holder of any unsurrendered Certificates until after those Certificates are surrendered as provided in this Article III. After such surrender, there shall be delivered and/or paid to the holder of the ADS delivered in exchange therefor, without interest, (i) at the time of surrender, the dividends or other distributions payable with respect to those ADS with a record date on or after the date of the Effective Time and a payment date on or prior to the date of such surrender and not previously paid and (ii) at the appropriate payment date, the dividends or other distributions payable with respect to those ADS with a record date on or after the date of the Effective Time but with a payment date subsequent to surrender.

(j) No holder of Rowan Delaware Common Stock will be entitled to exercise voting or other stockholder rights with respect to ADS deliverable with respect to such Rowan Delaware Common Stock until after such holder has surrendered the Certificates representing such Rowan Delaware Common Stock as provided in this Article III.

(k) In the event that any Certificate shall have been lost, stolen or destroyed, upon the holder’s compliance with the replacement requirements established by the Exchange Agent, including, if necessary, the posting by the holder of a bond in customary amount as indemnity against any claim that may be made against it with respect to the Certificate, the Exchange Agent shall deliver in exchange for the lost, stolen or destroyed Certificate the applicable ADS deliverable in respect of the shares of Rowan Delaware Common Stock represented by the Certificate pursuant to this Article III.

(l) Each holder of shares of Rowan Delaware Common Stock otherwise entitled to receive a fractional interest in an ADS pursuant to the terms of this Article III shall be entitled to receive, in accordance with the provisions of this Section 3.2(l), a cash payment (without interest) in lieu of such fractional interest in an ADS determined by multiplying the fractional interest in an ADS to which such holder would otherwise be entitled by the closing price for shares of Rowan Delaware Common Stock as reported on the New York Stock Exchange (“NYSE”) on the last trading day prior to the date on which the Effective Time occurs. Any cash payment in lieu of a fractional interest shall be made in U.S. dollars.

(m) Notwithstanding anything in this Agreement to the contrary, the Surviving Corporation and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any former holder of shares of Rowan Delaware Common Stock pursuant to this Agreement any amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code or under any provision of state, local or foreign tax law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority, the Surviving Corporation shall be treated as though it withheld an appropriate amount of the type of consideration otherwise payable pursuant to this Agreement to any former holder of shares of Rowan Delaware Common Stock, sold this consideration for an amount of cash equal to the fair market value of the consideration at the time of the deemed sale and paid these cash proceeds to the appropriate taxing authority.

Section 3.3 No Dissenters’ Rights. There are no dissenters’ rights or appraisal rights available to holders of Rowan Delaware Common Stock under the DGCL in connection with the Merger.

ARTICLE IV

EMPLOYEE BENEFIT AND COMPENSATION PLANS AND AGREEMENTS

Section 4.1 Assignment and Assumption of Equity Plans. At the Effective Time, Rowan Delaware shall assign to Rowan UK, and shall cause Rowan UK to adopt and assume, the Rowan Companies, Inc. 2009 Incentive Plan (“2009 Incentive Plan”) for purposes of Rowan UK granting equity awards after the Effective Time, and such other plans, if any, so authorized by the Board. Rowan Delaware shall remain the plan sponsor of all other Equity Plans and, further, Rowan Delaware shall remain the sponsor of all outstanding equity awards

 

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granted under the Equity Plans, including outstanding awards granted under the 2009 Incentive Plan prior to the Effective Time, unless otherwise determined by the Board. To the extent an Equity Plan provides for the award of incentive stock options pursuant to Section 422 of the Code, approval of such plan by Rowan Delaware, as the sole direct or indirect shareholder of Rowan UK, shall be deemed, as of the Effective Time, to constitute shareholder approval of such Equity Plan and the issuance or delivery of ADS under the share limitations set forth thereunder for purposes of Section 422(b) of the Code, to the extent such shareholder approval is required.

Section 4.2 Application of Equity Plans to ADS. To the extent any Equity Plan provides for the grant, issuance, delivery or purchase of, or otherwise relates to, options, stock appreciation rights, awards of restricted stock or restricted stock units or other rights to purchase, acquire or receive shares of Rowan Delaware Common Stock (or the right to receive benefits or amounts by reference to those shares), from and after the Effective Time, Rowan Delaware (or Rowan UK, if applicable) shall cause such Equity Plan to be amended to provide for the grant, issuance, delivery, acquisition or purchase of, or otherwise relate to, ADS and ADRs, as applicable, and all options or awards issued, or benefits available or based upon (including by reference to) the value of a specified number of shares of Rowan Delaware Common Stock, under such Equity Plans after the Effective Time shall entitle the holder thereof to purchase or receive, or receive payment based on (including by reference to), as applicable, an equal number of ADS in accordance with the terms of such Equity Plans. Except as provided in this Section 4.2 and for certain amendments to the Equity Plans to reflect the Merger and comply or facilitate compliance with applicable English and/or U.K. corporate and tax law requirements, the outstanding options, stock appreciation rights, restricted stock awards, restricted stock unit awards or other equity-based awards or benefits available under the terms of any Equity Plan at and following the Effective Time shall be subject to the same terms and conditions as under such Equity Plan and the agreements relating thereto immediately prior to the Effective Time (including, for greater certainty, having the same exercise or measurement price). Notwithstanding the foregoing, the number of ADS and ADRs,