Atos Origin shares gained 13.49% Wednesday after the European outsourcer said it reached an agreement to acquire the IT services arm of Siemens for a total of $1.13 Billion. The move creates a global tech services powerhouse with more than 78,000 employees worldwide and combined revenues of $11.5 billion.
Under the terms of the deal, which creates Europe's largest outsourcing company, Atos Origin will pay Siemens $550 million in shares, $333 million in bonds, and $247 million in cash for Siemens IT Solutions. Siemens also ends up with a 15% equity share in Atos Origin.
The new company, which will continue to operate under the name Atos Origin, will also provide IT services back to Siemens for at least the next seven years.
Atos Origin officials said the deal will boost their company's ability to compete with global heavyweights like IBM as well as HP, which just inked a $1.4 billion deal to provide tech services to German utilities giant E.ON.
"Today marks the start of a very solid and promising long-term industrial alliance between Atos Origin and Siemens that will create a most attractive powerhouse in IT and hi-tech transactional services in Europe," said Atos Origin chairman and CEO Thierry Breton, in a statement late Tuesday.
"We are opening a wide field of new businesses and development opportunities to shape the future of IT for both our customers and employees. I am confident that the value generated by this partnership will be rewarding for all our shareholders, including Siemens," said Breton.
Siemens executives said the arrangement allows their company to focus on its core competencies in energy and industrial manufacturing while handing off IT support to an outsourcing specialist that becomes stronger as a result of the deal. "The two organizations benefit from outstanding complementaries regarding customer base, geographies, and services," said Siemens CEO Peter Loescher.
Siemens shares were up .86%, to $122.91, in late day trading Wednesday.
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