Introduction to the Proposed Combination
Saipem and Subsea7 have announced an exciting development in the energy sector - an agreement on the key terms of a potential merger, referred to as the ‘Proposed Combination’. This agreement will lead to the formation of Saipem7, a company poised to become a global leader in energy services. By merging the strengths of both companies, they aim to provide unparalleled services to clients worldwide.
Highlights of the Proposed Merger
The merger will bring together a robust backlog valued at €43 billion and expected revenues of approximately €20 billion. The newly formed company will employ over 45,000 individuals, including a highly skilled workforce of more than 9,000 engineers and project managers. This combination ensures that clients benefit from enhanced geographical footprints and a diversified array of competencies, capabilities, and technologies.
Ownership Structure and Shareholder Benefits
In this merger, the shareholders of both Saipem and Subsea7 will equally share ownership of the Combined Company. Each Subsea7 shareholder will receive 6.688 shares of Saipem for each share they hold, alongside an extraordinary dividend of €450 million prior to the merger's completion. This transaction is expected to create substantial value for all shareholders with estimated annual synergies of around €300 million by the third year post-merger.
Strategic Rationality Behind the Merger
Both companies share a strong conviction that this merger is strategically sound, especially with the increasing scale of client project requirements. By joining forces, Saipem and Subsea7 can unlock value indirectly benefiting their stakeholders. The merger is set to create a comprehensive solution portfolio comprising offshore and onshore services, covering various sectors such as oil, gas, carbon capture, and renewable energy.
Implementation and Future Operations
The Combined Company will establish a streamlined operation focusing on four key business areas: Offshore Engineering & Construction, Onshore Engineering & Construction, Sustainable Infrastructures, and Offshore Drilling. Significant emphasis will be placed on enhancing capital investment efficiency and achieving an attractive dividend policy, targeting at least 40% of the Free Cash Flow to shareholders post-merger.
Enhanced Global Capabilities
Saipem and Subsea7 aim to merge their extensive resources to create a robust global approach, ensuring they can undertake a vast array of projects, from shallow to ultra-deepwater operations. The Combined Company will operate a diverse fleet of over 60 construction vessels, enhancing its capability to deliver complex projects effectively.
Support from Key Shareholders
Key shareholders, including Siem Industries, Eni, and CDP Equity, have shown robust support for the merger, emphasizing their commitment to its success. Their involvement not only provides a strong backing for the agreement but also ensures a governance structure that supports overall company goals. Siem Industries is expected to appoint the Combined Company’s Chairman while CDP Equity and Eni will designate the CEO.
Conclusion and Next Steps
The step towards merging Saipem and Subsea7 is poised to redefine the energy services landscape. With an expected completion date in the second half of 2026, both companies are dedicated to meticulously progressing through the necessary phases, including due diligence and shareholder approvals. This merger represents not only a pivotal moment for the two companies but also for the entire energy sector, as it creates a formidable player ready to tackle the evolving challenges of the industry.
Frequently Asked Questions
What does the proposed merger between Saipem and Subsea7 entail?
The merger seeks to create Saipem7, a global leader in energy services, enhancing capabilities, resources, and client solutions.
How will the merger impact shareholders of Saipem and Subsea7?
Shareholders will own the Combined Company equally and will benefit from an extraordinary dividend and expected annual synergies.
What strategic advantages does the merger offer?
The merger allows for comprehensive service offerings, an expanded fleet, enhanced global reach, and significant cost synergies.
Who will lead the Combined Company post-merger?
Key shareholders will appoint leadership roles, with intended appointments for the Chairman and CEO roles already identified.
When is the merger expected to be completed?
The completion of the merger is anticipated in the second half of 2026, following necessary approvals and due diligence activities.
