Saipem (AO) | Buy | Full green light for the merger/Saipem is selling the shallow water unit

Research evidence excerpt

Saipem (AO) | Buy | Full green light for the merger/Saipem is selling the shallow water unit

Saipem Buy | Target Price: EUR5.00

The value of the transaction amounts to USD 285 million on a debt-free/cash-free basis and will be paid in cash at closing, subject

to customary adjustment mechanisms.

– We are not so far from the value we calculated in our recent large report, with c.EUR300m for the entire business unit.

– Upon completion of the transaction, the parties will enter into a bareboat charter agreement that will allow Saipem to

continue its ongoing operations in Mexico with the Perro Negro 10 rig and to ensure full compliance with its existing

commitments.

Completion of the disposal is expected in Q3 2026

The streamlining of the group's business has started. We published a large report on that side recently; link

– In our view, value creation from the merger will require significant financial engineering. We remain convinced that the merger

structure was designed from the outset with a clear objective in mind: a future US spin-off or secondary listing of the combined

entity offshore E&C activities under the “new Subsea 7” platform.

– We believe the bulk of the financial engineering upside could come from a US spinoff of the “new Subsea 7” entity. Based on

the valuation multiples of key peer TechnipFMC, we estimate that the value of this business could be close to EUR40bn.

Wewould also highlight that the US-Europe valuation gap has narrowed to around 30% in recent months, while the

valuationdiscount between the current Subsea 7 entity and TechnipFMC has widened to close to 60% in recent months.

– Additional portfolio actions could also involve the Sustainable Infrastructure and Offshore drilling businesses, while

Saipem7would focus on Onshore E&C activities