By Dominic Chopping
Italian energy-services provider Saipem will merge with Norwegian rival Subsea7 in a deal valued at around $4.86 billion, creating a global company with expertise across drilling, engineering and construction.
Under terms of the proposed deal announced late Sunday, Subsea7 shareholders will receive 6.688 Saipem shares for each Subsea7 share they hold. The two sets of shareholders are each set to hold 50% of the newly combined company.
Management of both companies said they see compelling logic in creating a global provider, particularly considering the growing size of client projects, with the deal enhancing shareholder value through complementary services and geographical presence.
The combined company, to be named Saipem7, will have a combined backlog of 43 billion euros ($44.98 billion), revenue of around 20 billion euros and earnings before interest, tax, depreciation and amortization in excess of 2 billion euros, they said.
Saipem7 would be headquartered in Milan and have its shares listed on both the Milan and the Oslo stock exchanges.
The companies said they expect annual synergies of around 300 million euros, with one-off costs seen at around 270 million euros.
Saipem's largest shareholders Eni and CDP Equity, and Subsea7's largest shareholder Siem Industries have all entered into a separate agreement to support the proposed deal.
Saipem Chief Executive Alessandro Puliti is expected to head Saipem7, and Subsea7 Chief Executive John Evans is expected to lead Saipem7's offshore business, the companies said.
Subsea7 shareholders will receive an extraordinary cash dividend of 450 million euros prior to deal completion, which is expected in the second half of 2026.
The deal terms put a premium on Subsea7's market valuation relative to Saipem based on the 450 million-euro cash distribution, Victoria McCulloch at RBC Capital Markets said.
"We expect both stocks to react positively to this announcement today," McCulloch said.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
February 24, 2025 02:50 ET (07:50 GMT)
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