Stock Markets July 6, 2026 05:36 AM

BNP Paribas Restarts Coverage After Brazil Clears Saipem-Subsea 7 Merger

Brokerage upgrades Saipem to outperform and assigns neutral rating to Subsea 7 after CADE approval shifts deal toward completion

By Caleb Monroe
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BNP Paribas has resumed coverage of Saipem and Subsea 7 following approval from Brazil's antitrust regulator, CADE. The bank rates Saipem 'outperform' with a €5.3 target and Subsea 7 'neutral' with a 375 NOK target, citing a markedly reduced chance of delay and meaningful potential synergies and valuation upside for the combined entity.

BNP Paribas Restarts Coverage After Brazil Clears Saipem-Subsea 7 Merger
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Key Points

  • CADE approval in Brazil moves the Saipem-Subsea 7 merger from 'possible' to 'pending', with BNP Paribas expecting close in H2 2026 and low delay risk.
  • BNP Paribas sets Saipem to 'outperform' (target €5.3) and Subsea 7 to 'neutral' (target 375 NOK), and sees the combined entity with about 40% upside versus current market valuations.
  • Merger synergies could add the equivalent of 5% to 12% of BNP Paribas's 2027-2028 EBITDA forecasts, driven by integrated project delivery, geographic cross-selling, stronger pricing power and combined offshore wind operations; robust upstream capital expenditure supports pricing power across offshore services.

BNP Paribas has reinstated analyst coverage on Saipem and Subsea 7 after Brazil’s competition authority, CADE, cleared a key regulatory step in the companies' proposed merger. The brokerage assigned Saipem an "outperform" rating with a price target of €5.3 and gave Subsea 7 a "neutral" rating with a 375 Norwegian crown target.

In its assessment, BNP Paribas described CADE's approval as a "major milestone," saying the regulatory development moves the merger’s completion status "from 'possible' to 'pending'." The bank indicated it sees a low risk of further delays and is projecting the transaction to close in the second half of 2026.

BNP Paribas quantified potential upside from combining the two businesses, estimating additional merger synergies that could exceed previously stated guidance. The brokerage put the extra benefits at the equivalent of 5% to 12% of its EBITDA forecasts for 2027 and 2028, attributing that incremental value to a set of operational and commercial improvements.

Specifically, BNP Paribas flagged integrated project delivery, geographic cross-selling, enhanced pricing power and the union of the companies' offshore wind operations as the primary drivers of the upside. The bank also identified further sources of potential value creation through portfolio actions, noting that a partial or full divestment of the offshore drilling business or renewables operations could unlock additional value, as could a strategic review of the Sustainable Infrastructures unit.

On valuation, BNP Paribas estimated the combined Saipem-Subsea 7 entity could have approximately 40% upside versus prevailing market valuations. Breaking the outlook down by company, the broker described Saipem shares as having gained more than 70% year-to-date, calling the stock "a clear outperformer." Subsea 7, by contrast, was viewed by BNP Paribas as offering roughly 10% valuation upside on its own.

For Saipem, BNP Paribas highlighted several levers for further share appreciation: balance sheet deleveraging, disciplined capital allocation, margin expansion as older projects roll off the books, and potential divestments of non-core assets. These elements, the bank said, could contribute additional upside beyond the baseline valuation improvement arising from the merger.

Beyond the companies themselves, BNP Paribas commented on the market backdrop for offshore services suppliers. The brokerage stated that upstream capital expenditure remains robust, a factor that underpins pricing power for vendors operating in offshore pipelay in harsh and deepwater environments, subsea construction and support vessels, and engineering services.

Finally, BNP Paribas said it had grown more cautious in its oil price outlook following the recent U.S.-Iran ceasefire, without quantifying the change. The bank's cautious oil-price stance was noted alongside its generally constructive view of the merger's prospects and the potential benefits for the combined group's earnings power.


Summary

Following CADE clearance in Brazil, BNP Paribas resumed coverage of Saipem and Subsea 7, assigning Saipem an "outperform" rating with a €5.3 target and Subsea 7 a "neutral" rating with a 375 NOK target. The broker expects the deal to close in H2 2026, foresees low delay risk, and projects meaningful synergy upside that could equal 5% to 12% of its 2027-2028 EBITDA forecasts. BNP Paribas estimated about 40% combined valuation upside and identified further value through potential divestments and strategic reviews.

Risks

  • Regulatory and timing uncertainty remains until the transaction formally closes, despite CADE's approval - impacts M&A and offshore services sectors.
  • BNP Paribas noted a more cautious outlook on oil prices following the U.S.-Iran ceasefire, which could affect offshore project economics and supplier demand - impacts oil & gas and offshore services.
  • Realization of estimated synergies and value from potential divestments is not guaranteed; execution risk could affect expected EBITDA uplift - impacts engineering services, drilling and renewables segments.

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