German technology giant Siemens AG is selling its money-losing IT Solutions and Services division to French integrator Atos Origin for €850m (£720m).
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The deal, which Siemens president and CEO Peter Loscher claimed will create a European "IT Champion" sees Siemens taking a 15% stake in Atos Origin for a period of five years.
It also includes a seven-year outsourcing contract worth €5.5bn, under which Atos Origin will provide managed services and systems integration to Siemens.
Troubled Siemens IT Solutions and Services has already undergone substantial restructuring in recent years with the loss of over 4,000 jobs, and it is understood that 1,750 more will be cut as the deal - set to close in July 2011 - goes through.
Nevertheless, Atos Origin said it was expecting to make pro forma revenues of €8.7bn as a result of the purchase, and is targeting operating margins of 7% to 8% by 2013.
"Today marks the start of a very solid and promising long-term industrial alliance between Atos Origin and Siemens that wull create a most attractiv epowerhouse in IT and hi-tech transactional services in Europe," said Atos Origin chairman and CEO Thierry Breton.
"We are opening a wide field of new business and development opportunities to shape the future of It for both our customers and employees," he added.