Saipem and Subsea 7 broker mega merger deal

Italian offshore engineering and construction giant Saipem and offshore engineering and services player Subsea 7 have reached an agreement in principle on the key terms of a possible merger of the two companies.

The combination of Saipem and Subsea 7 will be completed by way of an EU cross-border statutory merger carried out incorporating Subsea 7 into Saipem, with the latter to be renamed Saipem7. The new firm will have a combined backlog of €43bn ($45.2bn) and revenue of around €20bn ($21bn).

According to a memorandum of understanding signed by the two companies, Saipem and Subsea 7 shareholders will own 50% each of the share capital of the combined company. Subsea 7 shareholders will receive 6.688 Saipem shares for each Subsea 7 share held.

The London-based firm will distribute an extraordinary dividend for an amount equal to €450m ($473m) immediately before completion. Post-completion, Saipem7 is expected to pay a dividend of at least 40% of free cash flow after repayment of lease liabilities.

The new company will be headquartered in Milan and listed on both the Milan and Oslo stock exchanges with completion set to occur in the second half of 2026. The parties will submit the final terms of the proposed combination to their respective boards for approval and to enter into a merger agreement around mid-2025.

After the merger is completed, Siem Industries, the largest shareholder of Subsea 7, would then own approximately 11.9% of the combined company’s capital, while Eni and CDP Equity – the largest shareholders of Saipem – would own around 10.6% and approximately 6.4%, respectively.

CDP Equity, Eni and Siem Industries have entered into a separate memorandum of understanding to support the merger and agree on the terms of a shareholders agreement, to be effective from the completion of the proposed combination.

As part of this, the chairman of the Saipem7 will be designated by Siem Industries and the CEO will be designated by CDP Equity and Eni – this role will most likely fall to Alessandro Puliti, the CEO of Saipem.

Saipem7 will be structured into four businesses – offshore engineering and construction, onshore engineering and construction, sustainable infrastructures, and offshore drilling.

The offshore engineering and construction business will be incorporated into an operationally autonomous company named Subsea7 and branded as Subsea 7 – a Saipem7 company. As it stands, it will be led by John Evans, CEO of Subsea 7.

It will comprise all of Subsea 7’s business and the asset-based services business of Saipem, representing approximately 83% of the combined group’s EBITDA of the last 12 months as of September 30, 2024. The company will be headquartered in London.

When merged, the new company will be a global organisation of over 45,000 people, including more than 9,000 engineers and project managers in more than 60 countries.