Atos Origin Buys Siemens IT Unit for $1.3 Billion

Atos Origin and Siemens announced on Dec. 14 that Atos Origin would pay 850 million euros (US$1.13 billion) for the information technology activities of Siemens.

Siemens, in exchange for its IT division, will get 15% of Atos Origin and 186 million euros in cash. Atos Origin will also issue bonds worth 250 million euros convertible into shares in five years' time and reserved for Siemens.

This "strategic global partnership" would create the seventh-biggest IT group in the world, they said.

Shares in French computer services consultancy Atos Origin leapt on Dec. 15 in response to a deal with Siemens targeted at creating the "European leader" in the sector.

Atos Origin is headed by former French finance minister Thierry Breton who said on French radio Europe One that the group intended to recruit 8,000 people throughout the world this year, of whom 1,600 would be hired in France.

The joint statement said that the deal would result in the shedding of 1,750 jobs at Siemens, of which 650 were in Germany.

Breton said that the agreement "enables us to be a leader without any doubt in Europe in the fields of computing ... sectors which are growing, in which there is much investment but also in which there is much recruitment."

He said that the number of people employed by Atos Origin would rise from 50,000 to 80,000, of whom 62,000 would be engineers.

In the statement, Breton said: "Today marks the beginning of a very strong and promising long-term industrial alliance between Atos and Siemens."

His counterpart at Siemens, Peter Loscher, said: "We are creating a European champion."

Analysts at CM-CIC Securities said "this deal has real strategic interest for Atos." It would enable Atos Origin to catch up French-British group Capgemini in the top 10 world computer services groups and to make good some weak points, notably in Germany.

In the first half of this year, Atos Origin had sales of 2.49 billion euros and made a net profit of 60 million euros. Siemens said last month that its sales for the year to the end of September totaled 75.978 billion euros, producing a record net profit of 4.07 billion euros.