Milan-listed Saipem, a company whose main shareholders are ENI and CDP Equity, Oslo-listed Subsea 7, a firm of Siem Industries, announced an unexpected agreement
Milan-listed energy services company Saipem and Oslo-listed competitor Subsea7 sa unexpectedly said to have signed a Memorandum of Understanding for an even merger that would create a leader global in the sector (see here the press release). The new entity’s main shareholders would be Milan-listed ENI (10.6%), CDP Equity (6.4%) and Siem Industries (11.9%).
Saipem will acquire and incorporate Subsea7 through a shares swap deal. The vendors will receive 6.688 shares of Saipem for each share in Subsea7 which will also pay an extraordinary dividendo of 450 million euros immediately prior to the completion of the transaction.
The new Milan-based company will rebrand as Saipem7 and will list on Milan and Oslo. Its aggregate order book will be worth 43 billion with a 20 billion turnover and an ebitda of above 2 billion. The firm will have 45000 workers, and more than 9000 of them will be engineers and project managers.
The parties currently expect to submit the final terms of the Proposed Combination to their respective Boards of Directors for approval and to enter into the Merger Agreement around mid-2025. The transaction may complete in 2H26. The executives of Saipem and Subsea7 held a conference call on 24 February, Monday, at 10am (CET) for sharing the deal’s details (see here the investors presentation).
Goldman Sachs International, Deutsche Bank, Clifford Chance LLP, and Advokatfirmaet Thommessen AS assisted Saipem.
Subsea7 retained Kirk Lovegrove & Company, Deloitte LLP, Freshfields LLP, Elvinger Hoss Prussen SA, and Advokatfirmaet Wiersholm AS.
In light of a separate Memorandum of Understanding for supporting the project and implementing a Governance Pact, CDP Equity and Eni will appoint the company’s ceo while Siem Industries will hire the chairman.
The merged entity will have four business lines: Offshore Engineering & Construction, Onshore Engineering & Construction, Sustainable Infrastructures, and Offshore Drilling. Alessandro Puliti will act as ceo while John Evans will head the London-based offshore business that will include all Subsea7 activities and Offshore Engineering & Construction unit of the Italian company which make 83% of the group’s ebitda on the ground of the 12 months che precedono il 30 settembre 2024.
The Memorandum of Understanding of Siem Industries, CDP Equity and Eni also included the adoption of the increased voting mechanism (two votes per share), a three-year lock-up commitment, a standstill commitment and an agreement to submit a common list for the appointment of the majority of the members of the Board of Directors of the Combined Company.
Saipem and Subsea7 are highly complementary in terms of market offering and geography. Annual synergies of approximately €300 million are expected from the third year following completion of the merger, with one-off costs associated with achieving these synergies of approximately €270 million. Following the merger, it is expected that Saipem7 will be able to distribute a dividend equal to at least 40% of Free Cash Flow net of the repayment of lease liabilities.
Meanwhile, under the terms of the MoU, Saipem and Subsea7 may make distributions to their shareholders during FY2025 of up to $350 million each in the form of a dividend. During FY2026, if the Proposed Combination is not completed before the approval of the FY2025 results of both Saipem and Subsea7, each of the two companies could distribute an amount of at least $300 million to its shareholders in the form of a dividend.
For Subsea 7, this is yet another transformation. The company was in fact founded in May 2002 as a joint venture between DSND and Halliburton Subsea. In 2004, DSND acquired Halliburton’s share in the joint venture and listed the company on the Oslo Stock Exchange under the name Subsea 7 Inc. In January 2011, Subsea 7 Inc merged with Acergy sa to form Subsea 7 sa, remaining listed on the Oslo Stock Exchange and then opening a subsequent m&a campaign that brought it to its current size, with revenues of $4.968 billion in the first 9 months of 2024 and an ebitda of $775 million (see here the press release).
To date, as mentioned, the main shareholder is Siem Industries sa, which owns 23.6 per cent of the capital (see here the shareholders list). Kristian Siem founded the company in the early 1980s. The firm has about 400 shareholders. Siem was listed on the Oslo Stock Exchange until 1999 and in the US until 1998, while today its shares trade only OTC. Siem is active in Offshore Energy Service, Ocean Shipping and Financial Investments. On the first front, in addition to Subsea7, it is active with Siem Offshore, which offers support vessels for offshore activities, and with EMGS, which provides formation data to determine the location and size of offshore energy fields. Ocean Shipping is the second business for the sea transport of cars, trucks, refrigerated fruit and vegetables. The subsidiary Seven Yield provides lease financing solutions to ship owners in the industrial shipping sector. The third business, financial investments, aims to ensure professional management and a risk-adjusted return on the cash generated by the group’s offshore energy services and shipping activities.
Folketrygdfondet (8.9%), Norway’s largest institutional investor, is Subsea 7’s second largest shareholder. The firm notably manages the Government Pension Fund of Norway, on behalf of the Norwegian Ministry of Finance. Elliott Management has 4.6% of Subsea 7.
Saipem’s main shareholders are ENI (21.19%) and CDP Equity (12,82%). ENI’s ceo Claudio Descalzi said: “With this operation we create a global leader of great industrial and technological value. Over the past few years, Saipem has been on a path of continuous improvement in its operational and financial performance, which has brought it to a position of excellence such that it is able to play a leading role in this significant transformation: a great achievement that fully enhances the support we have provided in our role as shareholders”.
Dario Scannapieco, the ceo of CDP, added: “Together with ENI, we worked in harmony and successfully to finalise a major industrial operation. The merger of Saipem and Subsea7’s activities represents a significant strengthening of high-technology companies that are well established in their markets and that from today, by exploiting their complementarity, create a reality destined to become a world leader in the sector”.
CDP created its subsidiary CDP Equity in 2016 as part of a reorganisation of Fondo Strategico Italiano and the foundation of FSI (see here a previous post by BeBeez). CDP Equity was created with the task of managing holdings in large, systemically important companies with a long-term perspective. And with this in mind, CDP Equity had inherited from Fondo Strategico Italiano the staked in Ansaldo Energia, Saipem, Metroweb, and SIA. Since then, CDP Equity then continued to manage those holdings and conduct new investments. In addition, FSI Investimenti, a company in which the Kuwait Investment Authority (KIA) and CDP Equity held an interest, also remained in existence. FSI sgr, on the other hand, had been established with the objective of supporting the growth plans of medium-large companies with significant development prospects, including through the attraction of foreign and private capital. CDP then permanently exited from the sgr in 2022 (see here a previous post by BeBeez). BeBeez Private Data, the private capital database of BeBeez and FSI, monitors CDP Equity and its unlisted portfolio companies. Find out here how to subscribe for one month or one year or Click here for booking a demo videocall with BeBeez database manager.
