FRANKFURT, Dec 14 (Reuters) - France's Atos Origin will acquire Siemens' IT unit Solutions and Services (SIS) in an 850 million euro ($1.14 billion) deal, the German conglomerate said late on Tuesday.
'We are creating a European Champion,' Siemens CEO Peter Loescher said.
The deal is expected to have a 'considerable negative earnings impact' in Siemens' fiscal 2011, it said in a statement.
The deal is structured in order to be short-term accretive on the earnings per share for Atos Origin, it added.
The deal caps efforts by Europe's biggest engineering company to spin off its money-losing IT unit and paves the way for Atos Origin to reach a global scale.
Following this deal, Atos Origin will become a major league player in cloud computing, which Siemens said will be a major growth driver in future.
The combined group will have pro forma revenues of around 8.7 billion euros, making it the largest in Europe and the seventh worldwide.
PROCUREMENT AND ADMIN SYNERGIES
Synergies in procurement as well as in administration are expected to generate 225 million euros in additional operating margin by 2013, Siemens said.
Under the deal, Siemens will receive around 12.5 million of newly issued Atos Origin shares worth 414 million euros. The stake is equivalent to a 15 percent stake in combined group, with a 5-year lock-up commitment.
Siemens will also receive a 5-year convertible bond of 250 million euros and a cash payment of around 186 million euros.
Siemens said it has also concluded a 7-year outsourcing contract with Atos Origin worth around 5.5 billion euros, under which the French company will operate Siemens' IT infrastructure and applications worldwide.
The new company is expected to generate revenue growth in line with market growth in 2011 and have a 6 percent operating margin, Siemens said. It estimated 2013 sales of 9-10 billion euros, with 7-8 percent operating margin.
Under the deal, the global workforce of SIS will be reduced by 1,750, with Siemens contributing up to 250 million euros to the integration and training costs.
Siemens has also agreed to assume responsibility after deal closure for certain obligations including project risks unidentified at closing.
($1=.7454 Euro)
(Reporting by Marilyn Gerlach; Editing by Tim Dobbyn and Richard Chang) Keywords: SIEMENS/ATOSORIGIN (marilyn.gerlach.reuters.com@reuters.net; 00 49 69 7565 1279) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
'We are creating a European Champion,' Siemens CEO Peter Loescher said.
The deal is expected to have a 'considerable negative earnings impact' in Siemens' fiscal 2011, it said in a statement.
The deal is structured in order to be short-term accretive on the earnings per share for Atos Origin, it added.
The deal caps efforts by Europe's biggest engineering company to spin off its money-losing IT unit and paves the way for Atos Origin to reach a global scale.
Following this deal, Atos Origin will become a major league player in cloud computing, which Siemens said will be a major growth driver in future.
The combined group will have pro forma revenues of around 8.7 billion euros, making it the largest in Europe and the seventh worldwide.
PROCUREMENT AND ADMIN SYNERGIES
Synergies in procurement as well as in administration are expected to generate 225 million euros in additional operating margin by 2013, Siemens said.
Under the deal, Siemens will receive around 12.5 million of newly issued Atos Origin shares worth 414 million euros. The stake is equivalent to a 15 percent stake in combined group, with a 5-year lock-up commitment.
Siemens will also receive a 5-year convertible bond of 250 million euros and a cash payment of around 186 million euros.
Siemens said it has also concluded a 7-year outsourcing contract with Atos Origin worth around 5.5 billion euros, under which the French company will operate Siemens' IT infrastructure and applications worldwide.
The new company is expected to generate revenue growth in line with market growth in 2011 and have a 6 percent operating margin, Siemens said. It estimated 2013 sales of 9-10 billion euros, with 7-8 percent operating margin.
Under the deal, the global workforce of SIS will be reduced by 1,750, with Siemens contributing up to 250 million euros to the integration and training costs.
Siemens has also agreed to assume responsibility after deal closure for certain obligations including project risks unidentified at closing.
($1=.7454 Euro)
(Reporting by Marilyn Gerlach; Editing by Tim Dobbyn and Richard Chang) Keywords: SIEMENS/ATOSORIGIN (marilyn.gerlach.reuters.com@reuters.net; 00 49 69 7565 1279) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.