Saipem and Subsea 7 Agree to Merger Terms to Form Offshore Giant
Saipem and Subsea 7 announced terms for their previously proposed merger to create a giant in the offshore services sector, supporting the oil and gas and other industries. The companies initially proposed the merger in February, saying terms would be set for the deal by mid-year. They expect to complete the merger by the second half of 2026.
Terms for the deal call for a true merger of equals. Under the binding merger agreement, on completion, Saipem and Subsea 7 shareholders will each own 50 percent of the share capital of the new company to be known as Saipem7. Subsea 7 shareholders will receive nearly 6.7 new Saipem shares for each share of Subsea 7 and a pre-closing extraordinary dividend valued at approximately $529 million.
They expect the deal will create a global leader in energy services. Highlighting the benefits, the merger announcement cites the highly complementary geographical footprint, competencies and capabilities, vessel fleets, and technologies. They report the combined company will have revenues of approximately €21 billion based on 2024 results. Earnings (EBITDA) will be in excess of €2 billion, and the operation is expected to generate more than €800 million in free cash flow.
Highlighting the global reach of the combined business, the companies report that the new Saipem7 will have projects in more than 60 countries. Its current backlog will be €43 billion. Operations will range from drilling, engineering, and construction to services and decommissioning.
The company will have a diversified fleet of more than 60 construction vessels, giving it the ability to work from shallow water to ultra-deep. They point to opportunities ranging from oil and gas to carbon capture and renewable energy.
The main shareholders, Eni, CDP Equity, and Siem Industries, fully support the proposed merger and have signed agreements to vote in favor of the deal. The CEO of the new company will be designated by Eni and CDP Equity, and currently, they report that it will be Alessandro Puliti. After years with Eni, Puliti was appointed General Manager of Saipem in February 2022, and he has been a Board Member, as well as Chief Executive Officer and General Manager of Saipem, since August 2022. Siem Industries will designate the Chairman of the Board of Directors, who is expected to be Kristian Siem.
The merger reflects the optimism for the sector, which rebounded after several hard years. In 2021, suffered strong setbacks that it linked to the offshore wind industry. The prolonged downturn in the oil and gas sectors also hit the industry hard.
The companies independently developed as leaders in the offshore services industry, tracing their origins to the 1950s and the start of modern offshore operations. Each has been involved in the consolidation and growth of the industry. The modern Subsea 7 emerged in the early 2000s and reports it is the product of over 25 different legacy companies and businesses, with Kristian Siem continuing to drive the company as its chairman. Saipem was also the product of mergers and served as the service supplier for Eni until 2015, when it reduced its holding, setting the stage for the modern company.