MILAN (Reuters) -Italy’s Saipem has agreed to merge with Norwegian rival Subsea 7 in an all-share deal that will create a leading European supplier of onshore and offshore energy services, the two companies said late on Sunday.
Shares in Subsea 7 rose 6.7% on the Oslo bourse by 0925 GMT. Saipem opened up more than 5%, later erasing gains to fall 0.7%.
The combined group, to be renamed Saipem7, will have a total order backlog of 43 billion euros ($45 billion), revenue of about 20 billion euros and core earnings of more than 2 billion euros, they said.
Saipem and Subsea7 shareholders will each own 50% each of the combined company’s share capital.
“The combined business will create cost savings and a strengthened integrated offering, particularly in offshore,” Citi analysts said in a note for clients, adding the merger could boost payouts in 2025 and 2026 for Saipem and Subsea7’s shareholders.
The transaction is expected to generate annual benefits, mainly through cost savings, of around 300 million euros from the third year after completion, thanks to fleet optimisation, unified procurement, sales and marketing operations.
Subsea7 shareholders will receive 6.688 Saipem shares for each share they hold, the companies said in a statement.
Subsea7 will also pay an extraordinary dividend of 450 million euros just before closing the deal.
The combined business will be led by current Saipem CEO Alessandro Puliti. Subsea7 CEO John Evans is expected to take the reins of the group’s offshore operations.
Subsea 7 and Saipem, which is controlled by state-backed oil major Eni and Italian state investor Cassa Depositi e Prestiti, held talks over a possible tie-up several years ago, but failed to reach an agreement.
($1 = 0.9547 euros)
(Reporting by Francesca Landini; Additional reporting by Nerijus Adomaitis in Oslo; Editing by Valentina Za)
