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Atos Origin to purchase Siemens IT Solutions

Deal is worth $1.14 billion and will see Atos competing with major IT players

Atos Origin to purchase Siemens IT Solutions
Atos will purchase Siemens IT Solutions and Services for $1.14 billion.

French IT services company, Atos Origin will buy Siemens IT Solutions and Services business for $ 1.14 billion.

"Today marks the start of a very solid and promising long term industrial alliance between Atos Origin and Siemens that will create a most attractive powerhouse in IT and hi-tech transactional Services in Europe. We are opening a wide field of new business and development opportunities to shape the future of IT for both our customers and employees. I am confident that the value generated by this partnership will be rewarding for all our shareholders, including Siemens," said Thierry Breton, Chairman of the Board and CEO of Atos Origin.

The merged operation is designed to compete with Accenture, Capgemini, Wipro, Tata Consulting and the services arm of IBM among others, according to a statement by Atos.

For a period of at least five years, Siemens will become a sustainable shareholder of Atos Origin with a 15% stake.

Siemens' IT unit has not been profitable for some time and has shed around 4,000 jobs, with more on the agenda, according to Atos.

The sale of the ailing unit to Atos will enable Siemens' chief executive officer Peter Löscher to end years of losses from a business that has proved unfixable for his two predecessors, Atos said.

"We are creating a European Champion. The two organisations benefit from outstanding complementarities regarding customer base, geographies and services. As a future sustainable shareholder and strategic partner of the new company we demonstrate our confidence in the value add created by this transaction for the Siemens IT Solutions and Services employees, our shareholders and customers. We will jointly develop new IT products and solutions and strengthen the innovation power of the new company. For the next seven years the new company will also be responsible for the service of the IT backbone of Siemens," said Peter Löscher, president and chief executive officer of Siemens:

Atos expects that the synergies in procurement and administration between the companies will generate over $250 million in additional operating margin by 2013.

The French company also expects the joint staff of 78,500 to generate over $10 billion in annual sales. To support the future merged operations, Siemens will grant it a seven year, $7.2 billion outsourcing deal.

Siemens IT is involved in several SAP implementation projects in the Middle East.

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