Atos and Siemens unite and gun for IBM
Franco-German merger creates €10bn IT services player
Services giants Atos Origin and Siemens have come together with the aim of rattling IBM's cage and becoming Europe's leading IT firm.
Atos has paid €850m (£721m) to acquire Siemens IT Solutions and Services (SIS), including a share consideration of some €414m, equating to 15 per cent of the French firm. A further €250m will be offered in convertible bonds, with the remaining €186m paid in cash. SIS will also be granted a seat on the Atos board for at least five years.
The combined company will have 78,500 staff worldwide, including about 10,000 in the UK and Ireland. By 2013, sales are expected to approach the €10bn mark, with operating margins of between seven and eight per cent. Siemens and Atos are ploughing €50m apiece into research and development. The deal is forecast to close early next summer.
As part of the deal, Siemens is to outsource almost all of its IT operations to Atos, in a seven-year €5.5bn deal described by the two firms as one the largest outsourcing deals ever.
Siemens chief executive Peter Löscher said: "Today is not just a great day for Atos and Siemens, it is a great day for the competitiveness agenda in Europe. The IT industry is an important enabler for the industrial competitive agenda of Europe and the world."
Atos is expecting to realise an additional €225m in EBIT by 2013, with up to 60 per cent of that coming by the end of 2012. Atos and Siemens are currently the sixth and eighth biggest IT services providers in Europe, respectively. The deal will, at a stroke, move them up to second place, ahead of HP, T-Systems, Capgemini and Fujitsu, and behind only IBM.
In the UK, figures released this year by TechMarketView put the two firms at 10th and 16th place in the software and IT services league table. Together, they would move ahead of Oracle, Accenture and CSC to 8th spot, with combined sales of almost £1.4bn.
Atos chief executive Thierry Breton (pictured) claimed he has his eyes firmly on becoming Europe's leading IT provider, with cloud computing expertise being a key differentiator.
"We will be in a leading position in cloud computing, which is extremely important," he said. "We will be the leading European company in managed services, and paving the way in cloud computing.
"The most important story in our industry for the next decade to come is the coming of cloud computing. The amount of data we need to store multiplies by two every 18 months. The transition from classical IT to cloud will be done through managed services."
Breton added that, following six months of talks between his firm and Siemens, today's announcement represents a different style of partnership, rather than a clear-cut acquisition.
"What we announce today is definitely a partnership; this is not a usual transaction," he added. "We very quickly realised that we share the same values and culture and, instead of seeing if we wanted sell or acquire, we decided we wanted to build a European champion of the IT industry."