Exxon has petitioned Brazil’s antitrust regulator to examine the proposed merger between Subsea7 and Saipem, saying it would reduce competition in the deepwater offshore drilling industry.
Bloomberg reports, citing documents, that the supermajor partnered with Brazil’s Petrobras and oilfield service provider TechnipFMC on its petition to the competition authorities, arguing the merger between the Norwegian and the Italian companies would lead to higher prices.
The petitioners specifically noted the segments of subsea umbilicals, risers, flowlines, and pipe-laying vessels, the report said.
“The transaction reduces choice for Exxon and other customers to a single relevant supplier in the deepwater pipeline installation market,” the supermajor said in its petition. TechnipFMC said the merger would make it harder for other companies in the sector to compete with the merged company.
Petrobras, for its part, said that close to 50% of the vessels it uses for offshore drilling activities are property of either Saipem or Subsea7, suggesting a merger would reduce its choice in oilfield service providers in the future.
Saipem and its Norway-based rival Subsea7 announced earlier this year that they had decided to combine their operations in a tie-up worth over $4.6 billion.
The new company, to be named Saipem7, will have revenues of some 21 billion euros, or $24.76 billion, earnings before interest, tax, depreciation, and amortization of over 2 billion euros, or $2.4 billion, and a combined backlog of 43 billion euro, equal to some $50.7 billion, Saipem said in July when the two companies entered into a binding merger agreement.
This week, the shareholders of Saipem and Subsea7 are expected to vote on the proposed merger at separate shareholders’ meetings on Thursday. The Italian government gave the green light to the merger earlier this week. The deal is expected to be finalized in the second half of next year.
By Charles Kennedy for Oilprice.com
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