“Atos and Origin to Merge Creating Leading IT Services Provider”
August 28, 2000
- Friendly merger of equals creates world class leader in IT and e-business services
- Atos Origin : pro-forma revenues of EUR 2.8 billion
- Complementary fit in operations, business segments, industries and geographies, leading to strong synergistic revenue growth opportunities
- Target to improve combined operating margins from 6% (2000) to 10% (2002)
Atos (SAX FP) of France, a leading European e-services provider, and Royal Philips Electronics (AEX: PHI, NYSE: PHG) of the Netherlands announced today that they have reached agreement to merge Atos and Origin, Philips' IT services subsidiary, creating a leading European player in IT services, with worldwide ambitions.
With combined 1999 pro-forma revenues of EUR 2.8 billion, the merger will create a world class leader in end-to-end business solutions and e-business services with a leading position in Europe and an outstanding platform for further growth in the rest of the world. The company will have operations in 30 countries and employ 27,000 people. Atos Origin will be registered in France and will have its operational head office in Amsterdam, the Netherlands.
Origin's shareholders, Philips with approximately 98% and current and ex-Origin employees with approximately 2%, will hold 49.9% of the equity of Atos Origin at closing.
The major benefits of the merger will be:
- A complementary mix of industry sector expertise including Atos strengths in finance, telcos and retail, and Origin strengths in process industry and hightech,
- A global presence reinforcing the ability to win international contracts,
- A combination of complementary service skills, enabling the merged entity to deliver enhanced end to end e-business and m-commerce solutions.
As consideration for Philips' shares in Origin, Philips will receive approximately 21.5 million newly issued Atos Origin shares, representing 48.9% of the outstanding capital of the combined group. Philips will also receive two tranches of warrants, each representing approximately 2.4 million Atos shares. These warrants may only be exercised if the stock price grows over a reference price (EUR 104) by 50% within 20 months after closing (tranch A) and 100% within 32 months after closing (tranch B). After exercise of the warrants, Philips' shareholding will have to stay below 35%
As part of the agreement, Philips intends to reduce its stake in the combined entity below 35% within two years of the completion of the transaction, either as a result of dilution from mergers and acquisition activity and/or by undertaking a secondary offering of shares representing approximately 10% of Atos Origin, subject to market conditions. Philips has also agreed, subject to certain exceptions, to limit its voting rights to 35% of the shares present or represented at any shareholders meeting.
A friendly merger
Bernard Bourigeaud, Atos' CEO said: "Both companies have very complementary customer bases, product offerings and geographical presence. Origin brings to the table a long list of blue chip clients, including Philips, and some of the best people in this industry. This is a critical step in becoming a world class leader in IT services. I am personally very excited by this move and both groups of management fully support the strategy behind the merger. Atos Origin will generate great opportunities for our staff and customers and create enhanced value for our shareholders. This transaction will be accretive starting in 2001".
Jan Hommen, Philips' CFO, said: "Philips believes that this transaction is in the best interest of Origin, its employees and customers. The merger with Atos is the best way to maximize the long-term value of Origin for Philips' shareholders. Philips is looking forward to using Atos Origin as a preferred vendor. Atos is a natural fit with Origin - we have confidence in the management team of the new group to achieve operational and strategic excellence."
Tim Lomax, Origin's CEO said: "The combination of Origin and Atos creates exciting opportunities for our respective customers, talented employees and investors. Speaking for Origin, it fulfills our ambition of becoming part of an IT services company enabling us to participate in a rapidly developing market place. The friendly character of the deal and the clear strategy established for the future sets the stage for our success."
This merger is wholeheartedly supported by both management groups. Atos Origin will be directed by a management board of 6 members - 3 from Atos and 3 from Origin - led by Bernard Bourigeaud, currently Chairman of the management board of Atos, as CEO. Other senior management responsibilities will be:
- Wilbert Kieboom (Origin), country leader for Netherlands and also responsible for Systems Integration worldwide,
- Dominique Illien (Atos), country leader for France and also responsible for On-line Services and Multimedia worldwide,
- Tim Lomax (Origin), responsible for all other territories and also for Managed Services worldwide,
- Eric Guilhou (Atos), chief financial officer,
- Jans Tielman (Origin), responsible for human resources, communication and marketing coordination.
The new management team will rapidly implement the merger plans. First line management and corporate structure will be announced by the end of September. In the course of the fourth quarter of this year an integrated sales organization will be set up and large accounts programs will be consolidated. A plan is in place to divest non-strategic assets. The merged group is planned to be fully operational by January 1st, 2001.
The transaction is subject to regulatory approval from the market authorities and will also require approval from existing Atos shareholders at an Extraordinary General Meeting to be held by the end of October, 2000.
For further information:
Atos: Marie-Tatiana Collombert
33(1) 49 00 96 33
Origin: Robert de Boer
+ 31 20 56 53 884
Philips: Ben Geerts
Corporate Communications - 31 20 5977215
Atos, a leading European e-services provider, is dedicated to helping companies grow and develop faster through a better use of technology. With fiscal 1999 sales of EUR 1 083 million, of which 33% was derived outside France, and a staff of 11,000 employees working in 11 European countries, Atos is focussed on providing companies strong expertise in electronic commerce, customer relationship management and supply chain management.
Origin enables clients to turn their vision into value driven results through effective strategic and operational solutions. The company's 16,000 employees deliver innovative IT solutions and strong industry experience to better manage the entire value network for companies and extended enterprises. Origin currently operates in 30 countries worldwide, with sales of EUR 1,727 million in 1999. Global customers include ABN-Amro, Akzo Nobel, Ericsson, ICI, Lucent Technologies, Philip Morris, Philips, Procter & Gamble, and Unilever.
Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 31.5 billion in 1999. It is a global leader in color television sets, lighting, electric shavers, color picture tubes for televisions and monitors, and one-chip TV products. Its 232,000 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, components, semiconductors, medical systems, and IT services (Origin). Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges.
The statements contained in this press release, particularly those regarding synergies, performance, costs, divestments, and growth are or may be forward looking statements and reflect each management's current analysis and expectations, based on reasonable assumptions. Actual results may differ materially from the statements made depending on a variety of factors, including business climate, economic and competitive uncertainties, higher manufacturing costs, reduced level of customer orders, risks in developing new products and technologies, environmental and safety regulations and clean-up costs, obtaining final regulatory approvals in a timely manner and in expected form, whether or not either or both of the two exchange offers are completed and the successful integration of the operations of each of the three companies. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements are contained in the relevant securities regulatory filings and financial statements of each of the respective companies. This press release does not constitute an offering of securities, which may be made by prospectus only.