Saipem and Subsea7 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.

Highlights

   - The combination of Saipem and Subsea7 (the “Combined Company”) will be renamed Saipem7, and will have a combined backlog of €43 billion[2], Revenue of approx. €20 billion[3] and EBITDA in excess of €2 billion[4]
   - A global organisation of over 45,000 people, including more than 9,000 engineers and project managers
   - Highly complementary geographical footprints, competencies and capabilities, vessel fleets and technologies that will benefit the Combined Company’s global client base
   - Saipem and Subsea7 shareholders will own 50% each of the share capital of the Combined Company
   - Subsea7 shareholders will receive 6.688 Saipem shares for each Subsea7 share held. Subsea7 will distribute an extraordinary dividend for an amount equal to €450 million immediately prior to completion
   - Transaction expected to deliver material value creation for the shareholders of both Saipem and Subsea7. Annual synergies of approximately €300 million are expected to be achieved in the third year after completion, with one-off costs to achieve such synergies of approximately €270 million
   - The Combined Company will be listed on both the Milan and Oslo stock exchange
   - Siem Industries, reference shareholder of Subsea7, as well as Eni and CDP Equity, reference shareholders of Saipem, have expressed their strong support and intend to vote in favour of the transaction
   - Completion anticipated to occur in the second half of 2026

The management of both Saipem and Subsea7 share the conviction that there is compelling logic in creating a global leader in energy services, particularly considering the growing size of clients’ projects. Saipem and Subsea7 are highly complementary in terms of market offerings and geographies. The combination would enhance value for shareholders, and all stakeholders, both in the current market and in the long term.

CDP Equity, Eni and Siem Industries have entered into a separate Memorandum of Understanding, undertaking to support the Proposed Combination and agreeing on the terms of a Shareholders Agreement, to be effective from completion of the Proposed Combination. As part of this, it is intended that the Combined Company’s Chairman will be designated by Siem Industries and that the Combined Company’s CEO will be designated by CDP Equity and Eni. In addition, it is currently envisaged that Mr Alessandro Puliti will be appointed as CEO of the Combined Company[5] while it is currently envisaged that Mr John Evans will be the CEO of the entity that will manage the Offshore business of the Combined Company. Such Offshore business will comprise all of Subsea7 and Saipem’s Offshore Engineering & Construction activities.

The by-laws of the Combined Company are expected to provide for loyalty shares (double votes).

Strategic Rationale of the Proposed Combination

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 optimise 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, utilising 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 optimisation, procurement, sales and marketing, and process efficiencies
   - A More Efficient Capital Investment Programme: optimised 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[6] 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

Transaction Terms

   - Subsea7 shareholders would receive 6.688 new Saipem7 shares for each Subsea7 share held
   - Assuming all Subsea7 shareholders participate in the merger, the share capital of the Combined Company will be held 50-50% by the current shareholders of Saipem and Subsea7
   - Immediately prior to completion of the Proposed Combination, Subsea7 shareholders would receive an extraordinary cash dividend of €450 million[7]

Organisational Structure of the Combined Company

   - The Combined Company will be structured in four businesses: Offshore Engineering & Construction, Onshore Engineering & Construction, Sustainable Infrastructures and Offshore Drilling
   - The Offshore Engineering & Construction business will be incorporated in an operationally autonomous company, named Subsea7 and branded as “Subsea7 – a Saipem7 Company”, and it is currently envisaged that it will be led by Mr John Evans. It will comprise all of Subsea7’s business and the Asset Based Services business of Saipem, representing approximately 83% of the combined group’s EBITDA of the last 12 months as of 30 September 2024. The company will be headquartered in London
   - In line with Saipem’s previous strategy, the Onshore Engineering & Construction will be run with a focus on reducing overall risk and maximising profitability. The Sustainable Infrastructures business will aim to consolidate its presence in the Italian market with potential expansion overseas. The Offshore Drilling division will seek to continue to maximise its EBITDA and cash flow

Shareholder Remuneration

   - The MoU allows Saipem and Subsea7 to make shareholder distributions of up to $350 million each in 2025, in the form of dividends[8],[9]
   - In 2026, if the Proposed Combination is not completed before the approval of the full year 2025 results of Saipem and Subsea7, the two companies could each distribute by way of dividends[10],[11] at least $300 million
   - Following completion of the Proposed Combination, the Combined Company is expected to distribute to shareholders at least 40% of Free Cash Flow[12] after repayment of lease liabilities

Shareholders Agreement

The Memorandum of Understanding amongst Siem Industries, CDP Equity and Eni provides for, inter alia, a three-year shareholder lock-up and standstill obligation and the submission of a common slate for the appointment of the majority of the members of the board of directors of the Combined Company.

Timing, Conditions Precedent and Approvals

The entering into and signing of binding definitive documents in respect of the Proposed Combination is conditional, inter alia, on the successful completion of confirmatory due diligence by the parties, the execution of a mutually satisfactory merger agreement (the “Merger Agreement”) and the approval of the final terms of the Proposed Combination by the Board of Directors of Saipem and Subsea7. The parties will also engage with the relevant works council consultations required by the applicable laws.

Saipem and Subsea7 have undertaken mutual exclusivity obligations in connection with the negotiations of the Proposed Combination.

Moreover, completion of the Proposed Combination will be subject to customary conditions precedent for a transaction of this nature, including, inter alia, approval by the shareholders’ meetings of both Saipem and Subsea7, the former to be also passed with the so-called whitewash majorities for the purposes of the mandatory takeover bid exemption[13], and obtaining the required Italian government approval and customary regulatory clearances.

Until such conditions precedent are satisfied, there can be no certainty that the Proposed Combination will occur.

The MoU also provides for termination rights for each of Saipem and Subsea7 in connection with material findings in the context of the confirmatory due diligence, or upon payment of a break-up fee, should any of the companies wish to terminate the negotiations at its discretion before entering into the Merger Agreement.

The parties currently envisage to submit the final terms of the Proposed Combination to their respective Board of Directors for approval and to enter into the Merger Agreement around mid-2025. Completion is currently anticipated to occur in the second half of 2026.

(1) Merger by way of incorporation of Subsea7 into Saipem
(2) Combined backlog for Saipem and Subsea7 as of 30 September 2024
(3) Combined Revenue for Saipem and Subsea7 as per last 12 months as of 30 September 2024
(4) Combined EBITDA for Saipem and Subsea7 as per last 12 months as of 30 September 2024
(5) Subject to approval by the Shareholders’ Meeting and the Board of Directors of the Combined Company
(6) Free Cash Flow is defined as Cash Flow from Operations less Capital Expenditure plus Divestments
(7) Subject to approval by the Shareholders’ Meeting
(8) Subject to approval by the Shareholders’ Meeting and the Board of Directors
(9) The dividend paid by Saipem will be qualified as ordinary in nature
(10) Subject to approval by the Shareholders’ Meeting and the Board of Directors
(11) The dividend paid by Saipem will be qualified as ordinary in nature
(12) Free Cash Flow is defined as Cash Flow from Operations less Capital Expenditure plus Divestments
(13) Pursuant to Art. 49, paragraph 1, letter g) of Consob Regulation 11971/99

About Saipem

Saipem is a global leader in the engineering and construction of major projects for the energy and infrastructure sectors, both offshore and onshore. Saipem is “One Company” organized into business lines: Asset Based Services, Drilling, Energy Carriers, Offshore Wind, Sustainable Infrastructures, Robotics & Industrialised Solutions. The company has 6 fabrication yards and an offshore fleet of 21 construction vessels (of which 17 owned and 4 owned by third parties and managed by Saipem) and 15 drilling rigs, of which 9 owned. Always oriented towards technological innovation, the company’s purpose is “Engineering for a sustainable future”. As such Saipem is committed to supporting its clients on the energy transition pathway towards Net Zero, with increasingly digital means, technologies and processes geared for environmental sustainability. Listed on the Milan Stock Exchange, it is present in more than 50 countries around the world and employs about 30,000 people of over 120 nationalities.

About Subsea7

Subsea7 is a global leader in the delivery of offshore projects and services for the energy industry.
Subsea7 makes offshore energy transition possible through the continuous evolution of lower-carbon oil and gas and by enabling the growth of renewables and emerging energy.