Saipem and Subsea7 have announce that they have reached an agreement in principle on the key terms of a possible merger of the two companies [1] (the “Proposed Combination”) through the execution of a memorandum of understanding (the “MoU”).
The Proposed Combination is expected to create a global leader in energy services.
The Proposed Combination would be beneficial to the clients of both Saipem and Subsea7, bringing together the respective strengths of both companies:
- Comprehensive Solutions for Clients: a full spectrum of offshore and onshore services, from drilling, engineering and construction to life-of-field services and decommissioning, with an increased ability to optimize project schedules for clients in oil, gas, carbon capture and renewable energy
- World-class Expertise and Experience:a talented, global workforce of over 45,000 people, including more than 9,000 engineers and project managers, in more than 60 countries, contributing to deliver solutions unlocking value for clients
- Global Reach and Diversified Fleet:an expanded and diversified fleet of more than 60 construction vessels enhancing the Combined Company’s ability to undertake a wide range of projects, from shallow water to ultra-deepwater operations, utilizing a full portfolio of heavy lift, high-end J-lay, S-lay and reel-lay rigid pipeline solutions, flexible pipe and umbilical lay services and market-leading wind turbine, foundation and cable lay installation capabilities
- Innovation and Technology: combined expertise to foster innovation in offshore technologies, ensuring cutting-edge solutions for complex projects
The transaction would create significant shareholder value through:
- Synergies: expected annual synergies of approximately €300 million in the third year after completion, driven by fleet optimization, procurement, sales and marketing, and process efficiencies
- A More Efficient Capital Investment Program: optimized allocation of capital across a broader, complementary vessel fleet
- An Attractive Shareholder Remuneration Policy: post-completion, Saipem7 is expected to pay a dividend of at least 40% of Free Cash Flow[2] after repayment of lease liabilities
- Enhanced Capital Structure:a solid balance sheet that is expected to support an investment grade credit rating
- Greater Scale in Both Equity and Debt Capital Markets: access to a wider investor base and to more diversified sources of capital
Transaction Structure and Ownership
- The Combined Company would be created by way of an EU cross-border statutory merger carried out by way of incorporation of Subsea 7 into Saipem, with the latter to be renamed “Saipem7”. The Combined Company would be headquartered in Milan and have its shares listed on both the Milan and the Oslo stock exchanges.
- Siem Industries (being the largest shareholder of Subsea7) would then own approximately 11.9% of the Combined Company’s capital, while Eni and CDP Equity (being the largest shareholders of Saipem) would own approximately 10.6% and approximately 6.4%, respectively.
For more details, visit www.saipem.com and www.subsea7.com
[1] Merger by way of incorporation of Subsea7 into Saipem
[2] Free Cash Flow is defined as Cash Flow from Operations less Capital
Expenditure plus Divestments