Atos Acquires Siemens IT

Wednesday, 15 December 2010 10:49 Ayman Abouseif
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Atos Origin the French IT services company will buy Siemens IT Solutions and Services business in a deal valued $ 1.14 billion in an attempt to create a new ‘European IT Champion’ according to a statement issued by the two companies.

The merged operations will compete with Accenture, Capgemini, Wipro, Tata Consulting and the services arm of IBM among others.

The German industrial conglomerate's IT unit is not profitable and has undergone heavy cost cutting measures including shedding some 4,200 jobs and more job cuts are on the agenda. Global staff of Siemens' IT unit will be reduced by up to another 1,750, among them 650 in Germany. Siemens AG’s plan to sell its computer services unit to Atos Origin will enable Chief Executive Officer Peter Loescher to end years of losses from a business that has proved unfixable for his two predecessors. Loescher, who took over in 2007, said last month that Siemens has “closed the chapter” on a dozen years of restructuring and will reward its shareholders with a record dividend.

Synergies in procurement as well as in administration are expected to generate more than $250 million in additional operating margin by 2013. The joint staff of 78,500 employees is expected to generate over $ 10 billion in annual sales. In order to support the future joint operations Siemens will grant it a seven year, EUR5.5 billion outsourcing deal.

Sources said that Atos Origin has been actively looking for suitable acquisition targets to boost its revenues. German labor union IG Metall said in a statement that the deal which is subject to regulatory approvals does look like a sustainable concept for Siemens' IT unit's future.

Siemens IT is involved in several SAP implementation projects in the Middle East. The deal which is a continuation of IT industry’s recent acquisition frenzy is not expected to be completed before July 2011.

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Last Updated on Wednesday, 15 December 2010 10:57
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