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$8.7bn deal reflects confidence in Bermuda

All stacks up: Triton’s merger with TAL International created the Bermudian-based holding company Triton International Ltd

A multibillion dollar merger of two freight container companies, resulting in a Bermudian-based holding company, is a clear example of market confidence in Bermuda public companies.

That’s the view of Steven Rees Davies, a Bermudian-based partner at law firm Appleby, which acted as an adviser in the $8.7 billion deal.

Appleby was the Bermuda counsel to Triton Container International, which merged with TAL International Group to form the world’s largest lessor of intermodal freight containers and chassis.

As reported last week by The Royal Gazette, the deal was closed on July 12 with the resulting holding company Triton International Ltd domiciling in Bermuda.

It was the second multibillion dollar merger deal to close this month that resulted in a Bermudian-based holding company. Appleby also played a part in the merger of IHS Inc and Markit, which resulted in the formation of IHS Markit.

Reflecting on the transactions, Mr Rees Davies said: “We are seeing transactions involving Bermuda companies that are effectively a combination of equals, the merging of Bermuda companies with foreign companies of similar international size and the resultant surviving company choosing Bermuda over onshore as its domicile of choice.”

The Triton/TAL transaction is probably the highest profile deal in recent years to have resulted in a Bermudian-based holding company.

The attraction of such deals, and in having the resulting entity domiciled offshore, is encouraging, according to Mr Rees Davies.

“These trends are a signal of how international business is responding to the efforts of the OECD and the US and other governments to globalise transparency and tax reporting standards through initiatives like the BEPS project.

“It is clear how important offshore, and Bermuda in particular, is in any international business structure.

“International conglomerates are acknowledging that this is the new norm for doing business around the world, and this is how things are going globally.

“It is showing that people are saying, ‘fine, we know we have to make changes, but offshore jurisdictions are good. They provide consistency, stability and an efficient and effective way to structure an international business’.”

And he said Bermuda stands out as a place where such transactions can be done with confidence, thanks to its reputation, stability and high standard of regulation.

Other factors in Bermuda’s favour are its location and its familiarity with the US.

Mr Rees Davies also praised the efforts of the Bermuda Monetary Authority and the Bermuda Government in modernising and originating new regulations to further enhance the jurisdictions attractiveness to the corporate world.

“We have a well-respected, well-regulated jurisdiction. Bermuda stands out as a gold standard. There is a familiarity and a trust and faith in our reputation. This is something that we are seeing increase in importance for our clients,” he said.

Mr Rees Davies sees a trend for mergers and offshore domiciling continuing due to “the appetite for the most-efficient global structure for these types of transactions”.

“They are looking for the most efficient way to structure. Bermuda is seen as one of the best-regulated, governed and respected of the jurisdictions offshore.”

He added: “Thanks to the international attention brought to offshore in recent years, the public are being educated on the reality of using offshore jurisdictions for doing business internationally.

“It appears this appetite is developing in a right and positive way for Bermuda.”