Italy has approved, with conditions, the merger of Italian energy services group Saipem and Norway’s Subsea7, which plan to create an energy services giant with $25 billion worth of combined revenues, Italian business daily MF-Milano Finanza reported on Tuesday.
The Italian government has decided to approve the merger plan, on the condition that Saipem, in which the state holds nearly 13%, gives priority to Italy’s energy infrastructure and keeps all activities considered strategic in Italy, MF reported today, citing a government decision from last week.
Despite the conditions the government has announced, it considers the merger crucial for Saipem.
Saipem and its Norway-based rival Subsea7 announced earlier this year they had decided to combine their operations in a tie-up worth over $4.6 billion.
The new company, to be named Saipem7, will have revenues of some 21 billion euros, or $24.76 billion, earnings before interest, tax, depreciation, and amortization of over 2 billion euros, or $2.4 billion, and a combined backlog of 43 billion euro, equal to some $50.7 billion, Saipem said in July when the two companies entered into a binding merger agreement.
This week, the shareholders of Saipem and Subsea7 are expected to vote on the proposed merger at separate shareholders’ meetings on Thursday, according to MF.
Siem Industries, currently the largest shareholder of Subsea7, will own approximately 11.8% of Saipem7’s share capital, while Eni and CDP Equity (currently the largest shareholders of Saipem) will respectively own approximately 10.6% and 6.4% of Saipem7’s share capital.
The combined entity will offer a full range of offshore and onshore services, from drilling, engineering and construction to life-of-field services and decommissioning, with an increased ability to optimize project scheduling for clients in oil, gas, carbon capture, and renewable energy, Saipem and Subsea7 say.
To the shareholders, Saipem7 is expected to distribute annually at least 40% of its free cash flow after repayment of lease liabilities.
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