Atos Origin and Siemens to Create a European IT Champion

A deal structure tailored to create short term value for Atos Origin shareholders including Siemens and strongly protective of Atos Origin cash

The deal creates the framework for a sustainable global partnership between Atos Origin and Siemens. The transaction will be financed by Atos Origin delivering approximately 12.5 million shares to Siemens - representing 15% of the outstanding capital of the combined group, with a five-year lock-up commitment and a cash consideration of euro 186 million, Atos Origin will also issue a five-year convertible bond reserved to Siemens for euro 250 million. After this transaction, Atos expects to be net debt free as early as the end of 2012.

The transaction is structured in order to be short-term accretive on the Earning per Share (EPS) for Atos Origin. Siemens IT Solutions and Services will be transferred by Siemens on a debt and cash free basis. Siemens has agreed also to assume responsibility after deal closure for certain obligations including projects risks unidentified at closing.

The creation of a champion in IT Services

The deal is a major step in the strategy of Atos Origin to reach a global scale and grow strongly both in IT services and in high tech transactional services. The two organisations benefit from outstanding complementarities regarding customer base, geographies and services. Together they form a strong combination with a presence in 42 countries, and 78 500 staff worldwide, that will accelerate growth, increase shareholders' value and will enhance the services it provides to its customers.

Following this deal Atos Origin will rank #1 among European companies for Managed Services in Europe according to market surveys and will further enhance its scale, expertise and capacity to compete for the big and global deals. It will also become a major league player in cloud computing which will be a major growth driver for years to come.

According to surveys, Atos Origin will become one of the first IT Services player in terms of revenue in Europe and number seven worldwide, with a significant increase in its customer base and range of offerings to win new sales opportunities.

Based on 2010 pro-forma consolidated figures, the combination will generate revenues of euro 8.7 billion, which is split as follows:

  • By Business Lines, Managed Services will account for 52% of revenues, Consulting & Systems Integration 33% and specialized businesses 15% (Hi- Tech Transactional Services, Atos WorldGrid and Medical BPO)
  • By Geographies, Germany will represent 15%, France 19%, the UK 12%, Benelux 12%, Central & Eastern Europe 8%, Iberia 8%, the Americas 10% and APAC 16%
  • By Vertical markets, Manufacturing, Retail & Transports will account for 35% of revenues, Public & Health revenues 25%, Financial Services 20% and Tele- com & Media 13% and Energy & Utilities 7%.

The integration of a reshaped business

Since March 2010 Siemens IT Solutions and Services has gone through a very significant re-organisation and restructuring process which aimed at strengthening and sharpening Siemens IT Solutions and Services business profile. Today Siemens IT Solutions and Services is a global Managed Services specialist with international presence, a global tier one customer base and a strong positioning in Germany, and in growth regions such as Northern, Central and Eastern Europe. After Siemens IT Solutions and Services legal carve out the unit generated pro-forma revenues of euro 3.7 billion. Siemens IT Solutions and Services will have approximately 28.000 employees at the expected closing date. Atos Origin will acquire the business including employee pensions and will receive adequate funding.

A Turnaround programme to increase Operating Margin

Following the deal closure, Atos Origin will complete the group transformation and integration of Siemens IT Solutions and Services into Atos Origin with the support of Siemens. It will execute its merger plans rapidly through the implementation of a second Total Operational Performance (TOP) programme - TOP2.

Following on from the successful TOP program launched in December 2008, TOP2 will increase the profitability of the combined entity by optimising synergies around office locations and procurement focusing on reducing G&A costs and implementing Lean management process.

These combined measures should generate euro 225 million additional operating margin by 2013.

A global partnership to support innovation, hi-tech transactional services development and business growth

Importantly, the deal reinforces the focus of Atos Origin on innovation and in particular its hi-tech Transactional Services (HTTS) business where it sees high growth potential and attractive margins. The strategic partnership with Siemens will enable collaboration on large bids and joint R&D efforts in key niches markets to strengthen innovation and HTTS offerings.

A dedicated HTTS joint commercial cooperation framework between Atos and Siemens has been designed to address jointly the expanding needs for transaction based services in various verticals like Health, Transports, cities and Industry where Siemens is one of the world leading companies.

New business opportunities will exist for HTTS within the Siemens IT Solutions and Services client base and on joint deals with Siemens. The existing Siemens IT Solutions and Services transaction based business will support the development of Atos Origin HTTS strategy.

2011 and 2013 objectives

The financial targets for Atos Origin are based on the following assumptions:

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