German investment bank Sal. Oppenheim issued a research note that claimed that senior sources said Siemens is in advanced negotiations with Atos Origin with regards to a business combination.
Such a deal would create a major European force in the IT services market with annual revenues of 9bn euros ($11.9bn). There are also good strategic reasons to merge because Atos Origin does not have a significant German presence.
Siemens CEO Klaus Kleinfeld said on a conference call that it is considering all strategic options with regards to SBS. Atos Origin refused to comment on the speculation.
SBS has been boosted by the news that its parent company intends to hand over the operation of its IT infrastructure for all its units and regions to it over the next three years. Siemens said SBS would benefit from the additional business by several hundred millions of euros annually, and claimed the initiative would reduce its own IT costs by hundreds of millions of euros.
Until recently, Siemens Group had its own IT infrastructure resources, and in 2002 it launched a cost-cutting initiative that standardized platforms. It is involved in creating a shared services approach to bring uniformity of processes throughout Siemens IT departments.
The move is certain to fan the flames of rumor surrounding SBS’s future because it makes the company a much more enticing proposition. Last month SBS confirmed plans to cut 670 jobs at its core German unit where it employs some 15,000 workers. The company made an operating loss of 25m euros ($32.6m) in its first fiscal quarter ending December 31, 2004, compared to an operating profit of 44m euros ($57.4m) in the year-ago quarter.
