Italy's Saipem, Norway's Subsea 7 to create energy services leader (updated)

Siem Industries SA

24/02/2025 14:11

(Repeats to additional clients, no change to text)
    By Francesca Landini and Nerijus Adomaitis
       MILAN/OSLO, Feb 24 (Reuters) - Italy's Saipem  SPMI.MI 
has agreed to merge with Norwegian rival Subsea 7  SUBC.OL  in
an all-share deal to create a leading global player in offshore
energy services.
    The combined group, to be renamed Saipem7, will have an
order backlog of 43 billion euros ($45 billion), revenue of
about 20 billion, and core earnings of more than 2 billion, the
two companies announced late on Sunday. 
    Saipem's shares opened up more than 5% on Monday before
reversing to fall more than 4% while Subsea 7 was up 3.2% as of
1324 GMT.
    Analysts during a call with the two groups' top teams cited
concerns about antitrust risks, a long schedule for completing
the merger, and the payment of a special dividend to Subsea 7
investors.
    Saipem and Subsea 7 executives said the planned merger would
combine complementary businesses across oil service segments and
geographies.
    "It will allow our clients to have one global oil service
provider that could offer everything from ultra-shallow water to
ultra-deep water," Subsea 7 CEO John Evans said on a call with
analysts on Monday.
    Saipem's clients include several national energy companies
including Saudi Aramco  2223.SE , QatarEnergy, and Abu Dhabi's
ADNOC. Subsea 7's customer base is more focussed on
international oil firms such as BP  BP.L  and Equinor  EQNR.OL .
    Analysts at Bernstein said the combined company would be "an
unmatched world leader" in providing engineering and
installations of complex subsea oil and gas systems, and in
providing services for the offshore wind industry. 
    Saipem CEO Alessandro Puliti said the combined group would
have about 20% market share in the Middle East and Latin
America, and some 22% in the North Sea, based on revenue.
    "Those are percentages that should not worry the
authorities," he added, answering a question about a risk of
anti-trust approval hurdles.
    While the two mainly operate in different regions, they
compete for contracts in Brazil, a growing offshore oil and gas
market.  
    The two partners aim to reach a binding merger agreement by
mid-2025 with completion expected in the second half of 2026.
    
    SPECIAL DIVIDEND
    Their shareholders will each own 50% of the combined
company's share capital.
    Siem Industries, controlled by Norwegian billionaire
Kristian Siem, would have a stake of about 11.9%, while Italian
energy group Eni  ENI.MI  and state investor Cassa Depositi e
Prestiti would own about 10.6% and 6.4%, respectively. 
    Subsea7 shareholders will receive 6.688 Saipem shares for
each share they hold, the companies said in a statement. 
    Subsea7 will also pay an extraordinary dividend of 450
million euros just before closing the deal.
    "The combined business will create cost savings and a
strengthened, integrated offering, particularly in offshore,"
Citi analysts said in a note for clients, adding the merger
could boost 2025 and 2026 payouts for shareholders. 
    The firms expect to generate annual benefits of around 300
million euros from the third year after completion, mainly
through cost savings, thanks to fleet optimisation, unified
procurement, sales, and marketing. 
    Saipem CEO Puliti will lead the combined business while
Subsea7's Evans is expected to lead its offshore operations.
    Subsea 7 and Saipem held talks over a possible tie-up
several years ago, but failed to reach an agreement.
    ($1 = 0.9547 euros)

 (Reporting by Francesca Landini in Milan and Nerijus Adomaitis
in Oslo; editing by Valentina Za and Jason Neely)
 ((francesca.landini@thomsonreuters.com; +39 02 66129437;
Reuters Messaging: reutersitaly.thomsonreuters@reuters.net))