Saipem and Subsea 7 Plan $4.7B Merger to Create Offshore Services Giant

Saipem and Subsea 7, two prominent leaders in the offshore energy sector, have entered into an agreement aimed at merging their operations to form an offshore services powerhouse. Valued at approximately $4.7 billion, the merger will combine the two companies, creating a global entity with a fleet of over 60 construction vessels and a workforce of 45,000 employees.

The companies emphasized the complementary nature of their geographical reach, expertise, capabilities, vessel fleets, and technologies, which they believe will benefit their global clientele. They anticipate that the merger will generate annual synergies of about €300 million by the third year following completion, with one-off costs of around €270 million to achieve these synergies. The combined company is expected to have a current backlog of €43 billion and nearly €20 billion in annual revenue.

Both companies explained that the merger would allow for a more comprehensive service offering, expanding their collective knowledge and experience base while creating a diversified global operation. Additionally, it is expected to foster future innovation in the industry. The management of Saipem and Subsea 7 are convinced that this move will create a leading global energy services company, particularly in response to the growing scale of client projects.

Despite recognizing the potential benefits, analysts raised concerns about the logistics of the merger, particularly in terms of the regulatory approval process. The companies have projected that the deal may not be completed until mid-2026.

The memorandum of understanding for the merger stipulates that it will be a merger of equals, with each company holding a 50 percent stake in the new entity, which will be named Saipem 7. Alessandro Puliti, CEO of Saipem, is set to become the CEO of the combined company, while John Evans, CEO of Subsea 7, will oversee the offshore business, which will include both Subsea 7’s operations and Saipem’s Offshore Engineering & Construction activities.

The large shareholders of both companies have expressed their support for the merger. Siem Industries, the largest shareholder of Subsea 7, will hold approximately 12 percent of the new entity, while Eni and CDP Equity, the largest shareholders of Saipem, will own around 10.6 percent and 6.4 percent, respectively.

Both companies have deep roots in the offshore services industry, with histories dating back to the 1950s when modern offshore operations began. Subsea 7, which emerged in the early 2000s, is the result of over 25 mergers and acquisitions, with Kristian Siem continuing to lead the company as its chairman. Saipem, also the product of mergers, served as a service provider for Eni until 2015 when Eni reduced its stake, paving the way for the current Saipem entity.

The deal's timeline aims for the merger agreement to be finalized by mid-year, although it will require significant antitrust and shareholder approvals before proceeding.