Saipem Makes Bid for Bouygues Offshore

Saipem SpA has made a cash bid of one billion euros ($915.6 million) for rival Bouygues Offshore. Saipem said it is offering 60 euros a share for the 51.1% stake in Bouygues Offshore held by Bouygues Construction, a unit of Bouygues SA, the French telecommunications-to-construction conglomerate. This represents a 9.1% premium to Bouygues Offshore 's closing share price of 55 euros Tuesday.

Saipem, controlled by Italian energy giant Eni SpA, said it will extend the offer to minority shareholders of Bouygues Offshore, valuing the proposed buyout at one billion euros. That's a 25% premium to Bouygues Offshore's average market capitalization of the last 30 days, Saipem estimated.

The Italian oil services company said the offer will be debt financed, ruling out any dilution to Eni's 49% interest in Saipem. The transaction requires clearance from competition authorities.

Shares of both Saipem and Bouygues Offshore were suspended Wednesday ahead of the announcement. Saipem shares resumed trading around midday and roared ahead as investors applauded the move. By mid-afternoon, the company's shares were trading up 26 European cents, or 3.8%, at 7.22 euros in Milan . Bouygues Offshore 's shares are scheduled to resume trading Thursday.

Saipem said the deal would be the largest takeover in Europe's oil services sector, and that the market capitalization of the combined companies would broadly match that of rival Technip-Coflexip, itself the result of a blockbuster merger last year. The takeover is seen as a good fit, as Bouygues Offshore would add industrial expertise in platform design and construction as well as maintenance to Saipem's strengths in platform and pipeline construction and drilling.

The Italian company is a key player in the Blue Steam project, a $2.3 billion gas pipeline connecting Russia with Turkey under the Black Sea.

"Bouygues has the designers, and Saipem has the doers, the builders," said a banker involved in the deal. The two companies are longtime partners in Saibos CML, a maritime construction joint venture. That partnership was to have dissolved next month after Saipem said it no longer wished to be involved. Bouygues Offshore was "too small to be viable" on its own, the banker said, adding that Bouygues had to "make a choice" about its subsidiary. Sales from the combined companies would top three billion euros in 2002, Saipem said, positioning it behind the five-billion-euro forecast for Technip-Coflexip. The Italian company said the transaction would be accretive to earnings a share from 2004, when it expects to achieve cost savings of 60 million euros.


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