Atos Origin buys Siemens' IT business
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Nearly 2,000 jobs lost as $1.1 billion deal creates Europe's second largest IT services provider
Atos Origin has acquired engineering giant Siemens' IT division for $1.1 billion in a deal that the French IT services company says will create a "pan-European IT champion".
The two companies have also signed separate seven-year, €5.5 billion contract, under which Atos will provide Siemens with IT services.
In a conference call, Atos CEO Theirry Bretton described the outsourcing deal as "the biggest worldwide IT contract ever signed". Siemens will also take a 15% share in Atos.
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The purchase of Siemens IT Solutions and Services (SIS) will increase Atos's annual revenues from €5.2 billion to approximately €10 billion by 2013, Bretton claimed, making it Europe's second largest IT services company. "IBM will become our main competitor," he remarked of the current incumbent.
SIS has been a loss making unit for Siemens. Last year, it posted a €463 million loss, although much of this was down to restructuring costs incurred by 4,200 staff redundancies. The deal with Atos means a further 1,750 SIS staff will lose their jobs.
When the acquisition closes, Atos' employee numbers will grow from around 50,000 today to 78,500.
Bretton said that the acquisition had been partly driven by weak forecasts for economic growth in its traditional customer markets in Western and Southern Europe.
Atos Origin has a large footprint in France, the UK and Spain, where combined GDP will grow 1.3% this year, he said. Germany and Eastern Europe, where Siemens has a stronger presence, will grow by around 2.4%, the Atos CEO added.
Atos also says that the addition of SIS will help it to sell cloud computing services across the continent. "The most important story in the decade to come is the coming of cloud computing environments," Bretton said. The acquisition will give it the "huge data centres all over Europe" required to provide these services, he added.
Atos rival Capgemini is also expanding into the German market. Today, it announced that it is to acquire Hanover-based IT services business CS Consulting for an undisclosed amount.
