Atos Origin buys Siemens’ IT business

Atos Origin has acquired Siemens’ IT solutions arm for $1.1 billion (€760 million) in a deal that the French IT services giant says will create a "pan-European IT champion".

As part of the agreement, Siemens has signed a separate seven-year, €5.5 billion contract for Atos to provide it with its 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.

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, giving the second largest share of the European IT services market. "IBM will become our main competitor," he remarked.

SIS has been a loss making unit for Siemens. Last year, it posted a deficit of €463 million, although much of this was down to restructuring costs incurred by 4,200 staff redundancies. The sale of SIS will cause another 1,750 staff to lose their jobs.

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.

When the acquisition closes, Atos will employ around 78,500 staff in more than 40 countries. The company currently employs about 50,000 people.

Atos was not the only company acquiring its way into the German IT services market today: rival Capgemini  announced that it is to acquire Hanover-based IT services business CS Consulting for an undisclosed amount.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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