Brazil approves merger of energy contractors Saipem and Subsea7 (updated)

Saipem SpA

Yesterday 17:34

Adds details on Brazil approval in paragraph 4, targeted deadline, ongoing antitrust reviews, potential new deadline in paragraphs 8-10
Saipem and Subsea7 commit to divest Seven Borealis ship
Original deadline to complete the deal is year-end
European Commission review remains key hurdle 
By Francesca Landini
MILAN, Nov 4 (Reuters) - The tribunal of Brazil's antitrust agency (CADE) has approved the merger of Italian oilfield services company Saipem SPMI.MI and Norway's Subsea7 SUBC.OL, Saipem said on Wednesday.
Brazil's green light is an important step towards the completion of the deal, even if the proposed combination is still under review by other antitrust authorities.
The merger aims to create a leading global player in offshore energy services, from drilling and engineering to laying subsea infrastructure for offshore oil and gas projects. Both companies operate a fleet of vessels for these services.
In the Latin American country, the merger faced opposition from oil groups including Exxon XOM.N, Petrobras PETR3.SA and rival oil services provider TechnipFMC 1T1.F, resulting in an earlier decision to approve the deal without conditions being reviewed.
In a statement, Saipem said it and Subsea7 had committed to divest Seven Borealis, a pipelay and heavy-lift ship, to address competition concerns raised by Brazil during its review.
The sale of the vessel, which is part of Subsea7's fleet, is not expected to significantly affect the reasons behind the combination, and the cost efficiencies previously announced are confirmed, it added.
"Subsea7 and Saipem remain firmly committed to the proposed combination and will continue to work constructively with the relevant authorities to secure prompt satisfaction or, where applicable, waiver of the remaining conditions set out in the common merger plan," Saipem said.
The combined group, to be renamed Saipem7, will have revenue of about €20 billion, and core earnings of more than €2 billion, the pair said in February 2025 when they announced the merger, giving a target completion date of the second half of 2026. 
The review by the European Commission is the main outstanding hurdle although an in-depth review is also underway in Australia.
     Analysts have said that completion is now more likely in the first quarter of 2027, assuming the parties agree to extend the current December 31 long-stop date in the merger agreement.

(Reporting by Francesca Landini, additional reporting by Nerijus Adomaitis in Oslo; editing by Sara Rossi, Kirsten Donovan)
((francesca.landini@thomsonreuters.com; +39 02 66129437; Reuters Messaging: reutersitaly.thomsonreuters@reuters.net/))