Information on the Target

Saipem is a renowned global leader in the engineering and construction of major energy and infrastructure projects, both offshore and onshore. The company is organized into various business lines including Asset-Based Services, Drilling, Energy Carriers, Offshore Wind, Sustainable Infrastructures, and Robotics & Industrialized Solutions. With 6 fabrication yards and a fleet of 21 construction vessels, Saipem is committed to driving technological innovation and supporting clients on their energy transition towards sustainability. Currently listed on the Milan Stock Exchange, Saipem operates in over 50 countries and employs approximately 30,000 individuals from more than 120 nationalities.

Subsea7, on the other hand, is a significant player in the energy industry, specializing in offshore projects and services. The company focuses on enabling the energy transition towards lower-carbon solutions within the oil and gas sector while also promoting the growth of renewable energy sources. By leveraging innovative approaches to offshore project management, Subsea7 plays a vital role in delivering sustainable energy solutions.

Industry Overview in Italy

The energy sector in Italy is increasingly embracing green technology and sustainable practices, reflecting a global trend towards energy transition. Italy is home to several initiatives aimed at enhancing renewable energy contributions, driven by both governmental policies and private investments. Such dynamics have made the Italian energy market an attractive environment, particularly for companies involved in energy engineering and construction.

In recent years, Italy's oil and gas industry has shown resilience, adapting to global market fluctuations while continuing to invest in new technologies and methods to extract resources efficiently and sustainably. The integration of digital technologies into traditional energy practices has allowed companies to optimize operations and reduce environmental impacts.

Additionally, the Italian offshore sector is experiencing significant interest due to its strategic location in the Mediterranean, serving as a hub for international energy projects. Investments in infrastructure and a growing focus on energy independence further solidify the importance of Italy in the energy landscape, promoting opportunities for collaboration among industry players.

The Rationale Behind the Deal

The proposed merger between Saipem and Subsea7 aims to create a global leader in energy services, significantly enhancing their market presence and operational efficiencies. The combination is expected to leverage the complementary capabilities and geographic strengths of both companies, allowing for a more extensive service offering across various sectors including oil, gas, carbon capture, and renewable energy.

By forming a larger entity with a substantial backlog and diversified fleet, the combined company, Saipem7, will be better positioned to meet the evolving demands of clients while optimizing project execution. The anticipated annual synergies of approximately €300 million further validate the strategic rationale behind the merger.

Information about the Investor

Key shareholders supporting this merger include Siem Industries, Eni, and CDP Equity, who have expressed strong backing for the transaction and intend to vote in favor. Siem Industries, as the largest shareholder of Subsea7, will own approximately 11.9% of Saipem7, while Eni and CDP Equity will hold 10.6% and 6.4%, respectively. This coalition of significant stakeholders brings not only financial muscle but also extensive industry experience and market access.

Both CDP Equity and Eni are well-respected entities within Italy's energy sector, recognized for their commitment to sustainability and innovation. Their involvement adds credibility to the merger and is expected to enhance investor confidence in the resulting entity, Saipem7.

View of Dealert

The Proposed Combination is strategically poised to be a good investment for stakeholders involved. By merging, Saipem and Subsea7 can unlock substantial synergies and, importantly, foster an environment for innovation across their combined capabilities. The integration is set to broaden their service offerings significantly and enhance project efficiencies.

Moreover, the projected annual synergies of €300 million and a solid capital structure positioned for an investment-grade credit rating imply a robust financial outlook for the newly formed entity. Investors can expect a well-managed dividend policy, with distributions anticipated to align with free cash flow generations.

However, successful integration will depend on effective management and execution of the merger to realize these projected synergies. There are inherent risks, including the challenges of uniting diverse corporate cultures and operational frameworks, which could impede the expected benefits if not handled effectively. Nonetheless, given Saipem and Subsea7's strong market positions, this merger is likely to provide long-term value creation for shareholders.

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