Italy-based energy company Saipem and Subsea7 have signed a binding merger agreement, forming a new entity in the energy sector.

The combined entity, to be named Saipem7, is projected to have revenues of around €21bn ($24.75bn), with EBITDA (earnings before interest, taxes, depreciation and amortisation) exceeding €2bn and a substantial backlog worth €43bn.

The merger, with the memorandum of understanding signed in February this year, is expected to generate more than €800m in free cash flow and create significant shareholder value.

A shareholders' agreement has been signed by Eni, CDP Equity and Siem Industries, ensuring support for the merger.

The CEO of Saipem7 will be Alessandro Puliti, designated by Eni and CDP Equity, while Kristian Siem of Siem Industries will serve as the chairman of the board.

The merger aims to benefit clients by combining the strengths of both companies, including a global reach across more than 60 countries, a diversified fleet and a combined workforce of approximately 44,000.

The transaction is set to yield annual cost and capital expenditure synergies of around €300m from the third year post-completion.

Saipem7 plans to distribute at least 40% of its free cash flow to shareholders annually after lease liabilities are covered.

The merger will be executed through an EU cross-border statutory merger, with Saipem absorbing Subsea7 and retaining its incorporation in Italy.

The newly formed company will be headquartered in the Italian city of Milan and listed on the Milan and Oslo stock exchanges.

Post-merger, Siem Industries will hold an 11.8% stake in Saipem7, while Eni and CDP Equity will own 10.6% and 6.4%, respectively.

Subsea7 shareholders will receive 6.688 new Saipem shares for each Subsea7 share, leading to an equal shareholding between Saipem and Subsea7's current shareholders upon completion.

Saipem7 will consist of four business units, with the Offshore Engineering & Construction segment operating as an autonomous company under the name Subsea7, branded as 'Subsea7, a Saipem7 Company'.

This unit will incorporate Subsea7's businesses and Saipem's Asset Based Services, encompassing offshore wind operations.

Other business units are Onshore Engineering & Construction, Sustainable Infrastructures and Drilling Offshore.

The merger, subject to customary conditions and regulatory approvals, is expected to be completed in the second half of 2026.

Financial advisory roles have been assigned to Goldman Sachs Bank Europe and Deutsche Bank for Saipem, and Kirk Lovegrove & Company and Deloitte for Subsea7.

Clifford Chance and Advokatfirmaet Thommessen are providing legal counsel to Saipem, while Freshfields, Elvinger Hoss Prussen and Advokatfirmaet Wiersholm are advising Subsea7.