French services giant Atos Origin is buying Siemens IT unit Solutions and Services (SIS), after signing an €850m deal with the German multinational.

Under the agreement, Siemens will be a “sustainable shareholder” of Atos Origin for at least the next five years, with a 15 per cent stake, or 12.5 million shares, worth €414m.

Siemens will also be handed a five-year convertible bond of €250m and a cash payout of €186m.

Atos Origin said the acquisition would bring in pro forma 2010 sales of around €8.7bn and bump up the company’s staff headcount to 78,500 workers worldwide.

But SIS will be hit with job cuts with a workforce reduction of 1,750 people planned.

The deal will also have a “considerable negative earnings impact” in Siemens 2011 financial year.

As part of the agreement Siemens said it had concluded a seven-year outsourcing contract with Atos Origin worth around €5.5bn. Under that global deal, the French services outfit will manage Siemens’ systems and IT infrastructure.

The two companies hope that their combined effort will create a “European IT champion”. ®