January 30, 2013 3:55 pm

Saipem share sale to be investigated

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Italy’s market regulator Consob has put a short selling ban on Saipem, the Italian oil services group controlled by Eni, one day after it said it will look into a sale of its shares ahead of a profit warning that sent the stock tumbling and knocked Italy’s stock market.

On Monday evening Bank of America Merrill Lynch announced an institutional placement of about €315m worth of Saipem shares, according to a pitch document sent from BoAML’s trading desk to institutional investors and seen by the Financial Times.

Saipem later announced a profit warning which sent its shares plunging 34.3 per cent at €20.01 on Wednesday. Eni fell 4.7 per cent to €18.40 and Italy’s FTSE MIB was down 3.4 per cent.

Saipem shares were trading up 3.2 per cent at €20.64 on Thursday morning against a 1 per cent fall on the FTSE MIB index.

A Consob official told the FT the regulator would work with foreign authorities to investigate whether there was any market abuse regarding the sale of Saipem shares ahead of the profit warning.

“There has been this placement and then the profit warning and so it is routine in this case to look into market abuse. We are going to use international co-operation,” Annelise Mancini, a spokesperson for Consob said.

One fund manager said the placement was described in the pitch as a “clean-up trade”, when an investor sells all the remaining shares of a stake it has already begun to dispose of. BoAML was looking to place 9.97m shares – or a 2.3 per cent stake in Saipem – at about €30.65 a share, a 3 per cent discount to the price at the time.

Bloomberg data show that on Monday BlackRock, the world’s largest asset manager, disclosed it had increased its stake in Saipem from 0.07 per cent to 1.91 per cent.

Bank of America Merrill Lynch declined to comment. Saipem was not immediately available for comment.

Saipem’s profit warning came as a shock to investors, who had been assured by previous management in October that the group would meet its 2012 targets.

However, on Tuesday Mr Tali’s successor, Umberto Vergine, said Saipem was now expecting an 80 per cent fall in earnings this year at its onshore oil services business, which is centred on the Middle East, Algeria and Nigeria. He also predicted a 70 per cent decline at its offshore oil services operations compared with last year following a fresh review of the business.

Saipem, which is 43 per cent owned by Italian energy group Eni, also said it expected its earnings before interest and tax to be 6 per cent lower than previously estimated for 2012 at about €1.5bn and net income to be about €900m.

The collapse in Saipem’s shares also hit rivals amid fears of growing competitive pressures in margins across the sector. Shares in Technip, the French oil services group, fell 7 per cent to €77.56 on Wednesday leaving its equity valued at €8.4bn.

Petrofac of the UK, Saipem’s FTSE 100 rival that has in previous years competed directly with the Italian group for contracts in the onshore arena, also dropped by 6 per cent to £16.37.

Additional reporting by Michael Kavanagh

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