Italy's Saipem and Norway's Subsea 7 have agreed to merge, creating a global energy services company with revenues of around €20bn/yr ($21bn/yr) and an order backlog of €43bn.
The move is designed to create the scale to tackle large and complex energy projects focused on engineering and construction (E&C) but also on energy transition projects such as wind and carbon capture.
Saipem held talks with Subsea 7 over a possible tie-up several years ago but failed to reach an agreement.
"The combination will give us a scale that is more in harmony with the magnitude of the projects in offshore energy for oil and gas and renewables industries," said Kristian Siem, chairman of Subsea 7.
Under the merger, Subsea 7 will be folded into its Italian rival, with shareholders of the Norwegian company receiving 6.688 Saipem shares for each share they own, along with an extraordinary dividend of €450mn.
Each set of shareholders will hold 50pc of the new company on completion. Saipem's largest shareholders — oil and gas firm Eni and state lender CDP — and Subsea 7's largest shareholder Siem Industries have all entered into a separate agreement to support the deal.
The new company, Saipem 7, will have a fleet of more than 60 vessels which management says will give it the flexibility to better respond to client requests.
"The new company is very, very much an offshore E&C company," said Subsea 7 chief executive John Evans, noting that over 80pc of its operating income comes from this segment.
"The two fleets are very compatible and complementary and will allow clients to have a single global service provider to provide everything from ultra-shallow water in the Middle East to ultra-deep in some of the newer provinces," he said.
Asked if the new company would be asset light by leasing more of its vessels, Evans said the model of combining older company-owned ships and leased units would continue. "You have to remember that with our backlogs we will be very busy for the next 2-3 years," he said.
The merger is expected to generate annual synergies of around €300m in the third year after completion, driven in large part by fleet optimisation and procurement. It is scheduled to close in the second half of 2026 with a binding merger agreement expected mid-2025.
Saipem 7 will be listed in both Milan and Oslo and will be headquartered in Milan, although the offshore E&C business will be run as a separate business based in London.
Saipem chief executive Alessandro Puliti, who will take over the role of chief executive at Saipem 7, said any decision to spin off the offshore E&C division at a later stage would be evaluated on an opportunistic basis. Puliti said the new company is expected to pay a dividend of at least 40pc of free cash flow after repayment of lease liabilities.
