Saipem and Subsea7 Shake Up the Industry with a High-Stakes Merger That Could Reshape Energy Services
The €20 Billion Shake-Up: How Saipem7 Plans to Dominate Energy Services
In a strategic move aimed at redefining the global energy services landscape, Saipem and Subsea7 have announced a merger to form Saipem7. With a €43 billion backlog, annual revenues of €20 billion, and EBITDA surpassing €2 billion, the newly combined entity is poised to challenge industry heavyweights like Schlumberger, Halliburton, and Baker Hughes. The deal, set for completion in the second half of 2026, reflects mounting pressures within the oil services sector and the growing demand for operational efficiencies, cost reductions, and a more diversified energy portfolio.
Behind the Numbers: Breaking Down the Merger Structure
- The merger is structured as a 50-50 ownership split between Saipem and Subsea7 shareholders.
- Subsea7 shareholders will receive 6.688 Saipem shares per Subsea7 share.
- Subsea7 will issue an extraordinary dividend of €450 million before the merger is finalized.
- The new entity will be headquartered in Milan and listed on both the Milan and Oslo stock exchanges.
- Expected synergies of €300 million annually will be realized within three years.
The newly formed Saipem7 will operate through four key business units:
- Offshore Engineering & Construction
- Onshore Engineering & Construction
- Sustainable Infrastructures
- Offshore Drilling
From an ownership perspective, Siem Industries (Subsea7’s largest shareholder) will hold 11.9%, Eni will retain 10.6%, and CDP Equity will maintain a 6.4% stake. The governance structure will be split, with the Chairman designated by Siem Industries and the CEO appointed by CDP Equity and Eni, with Alessandro Puliti expected to take the lead role.
Why This Merger? The Real Reasons Behind the Bold Move
The Oil Services Squeeze: Shrinking Margins and Market Turbulence
The oil services sector has been battling shrinking margins, fluctuating crude prices, and increasing cost pressures. Saipem itself acknowledged the need to “adapt to an industrial context characterized by lower volumes,” reinforcing the necessity of this consolidation.
The Green Pivot: Is This the Future of Energy Services?
With an increasing focus on renewable energy, offshore wind, and carbon capture, both companies recognize the urgency of reducing their dependency on oil & gas. Subsea7 has long specialized in offshore installations, while Saipem has a more diversified portfolio, including onshore drilling and emerging renewables. The merger aims to position Saipem7 as a global leader in sustainable energy solutions.
Bigger, Stronger, Faster: How Scale Unlocks Competitive Advantage
By pooling their resources, Saipem and Subsea7 gain a significant advantage in global project bidding, leveraging their diversified fleet of over 60 construction vessels and a workforce of 45,000 employees. The deal is projected to unlock €300 million in cost synergies through fleet optimization, consolidated procurement, and streamlined processes.
Potential Pitfalls: Where This Merger Could Go Wrong
Boardroom Battles: Will Power Struggles Stall Progress?
A merger of this magnitude is fraught with integration challenges. Saipem and Subsea7 operate with different corporate cultures, supply chains, and project management systems. The planned governance structure—with leadership split between multiple stakeholders—raises concerns over potential power struggles that could hinder decision-making.
Promises vs. Reality: Can They Deliver the Expected Cost Savings?
While €300 million in annual synergies is an attractive figure, mergers of this scale often experience setbacks in realizing cost efficiencies. The deal’s one-time integration costs of €270 million further add to financial pressures. Investors will be closely monitoring whether these savings materialize as expected.
Regulatory Red Tape: Could Approval Delays Jeopardize the Deal?
The merger is subject to multiple regulatory approvals across Italy, Norway, and other jurisdictions. Given the history of previous failed merger discussions between these two companies, there’s a lingering risk of stakeholder pushback or regulatory hurdles that could delay or derail the deal.
Industry Disruption: Could This Deal Spark a Merger Frenzy?
Will Competitors Be Forced to Merge to Stay Competitive?
The Saipem7 merger is likely just the beginning of a new wave of consolidation in the oil services sector. As traditional players struggle with declining profitability in oil & gas and an accelerated shift to renewables, industry giants such as Schlumberger, Halliburton, and Baker Hughes may explore similar mergers or acquisitions to remain competitive.
Short-Term Turbulence, Long-Term Gains: What Investors Need to Know
- Short-Term Risks: Shareholders face potential dilution in the short term, as the merger involves share distributions and a high initial cost burden.
- Long-Term Upside: If integration succeeds, Saipem7 could emerge as a dominant force, benefiting from its diversified portfolio, economies of scale, and enhanced access to global markets.
- Market Reaction: Investor sentiment remains cautious yet optimistic, with analysts predicting initial fluctuations but long-term re-rating potential if the synergy targets are met.
Energy Transition Acceleration: A Strategic Pivot or Just PR?
While the merged company’s core business remains in oil & gas services, its combined expertise in offshore wind, carbon capture, and sustainable infrastructure places it in a stronger position to pivot toward energy transition opportunities. Future investments in decarbonization technologies could make Saipem7 a key player in next-generation energy solutions.
Tech-Powered Efficiency: Can Saipem7 Set a New Industry Standard?
With a broader service portfolio and digitalization efforts, Saipem7 has the potential to become a benchmark for efficiency in the energy services industry. If integration challenges are overcome, the company could set new industry standards in project execution, vessel optimization, and supply chain management.
Smart Strategy or High-Stakes Gamble?
The Saipem–Subsea7 merger is not just a response to current market headwinds; it represents a strategic realignment to secure long-term industry leadership. The deal could fundamentally alter competitive dynamics in the energy services market, influencing future consolidations and investments.
While governance complexity, integration risks, and financial strain pose significant challenges, the potential for enhanced scale, operational efficiencies, and a stronger positioning in the energy transition could create lasting value for investors.
As the merger progresses, the global energy sector will be watching closely—will Saipem7 redefine the industry, or will it become another cautionary tale of overambition?