February 24, 2025 09:08 GMT
Saipem Announces Merger With Subsea7
ENERGY SECTOR
SPMIM Ba2[P]/BB+
Subsea7 is more specialised in offshore and subsea solutions whereas Saipem has a more diversified offering. Offshore, Engineering & Construction will act as an operationally autonomous business in the merged entity branded as “Subsea7 – a Saipem7 Company”.
Subsea7 is not an issuer; it is smaller (though higher margin), higher levered and less diversified than Saipem. The combined BS is “expected to support an IG rating” though we note the payout policy is slightly more aggressive than Saipem’s current. Saipem spreads look muted at 1-3bp wider.
- Saipem & Subsea7 to merge into "Saipem7". 50/50 ownership split; Subsea7 holders get 6.7 Saipem shares per share along with a EUR 0.45bn pre-close extraordinary dividend.
- EUR 300mn annual synergies by Year 3 against EUR 270mn one-off costs.
- H226 target completion; both companies to distribute up to USD 350mn in 2025 and at least USD 300mn in 2026 (if not approved by then). Payout policy of at least 40% of FCF post leases (Saipem is currently 30-40%). To be dual-listed in Italy and Norway.
- Combined entity to see EUR 19.7bn revs (Saipem: EUR 13.6 / Subsea7: EUR 6.1bn), EUR 2.1bn EBTIDA (EUR 1.2bn / EUR 0.9bn), EUR 43.3bn backlog (EUR 33.2bn / EUR 10.1bn), Net Debt EUR 1.3bn (EUR 0.1bn / EUR 0.8bn) for leverage of 0.6x (0.1x / 0.8x).
Keep reading...Show less
216 words