French information technology services company Atos Origin SA (ATO.FR) will buy Siemens AG's (SI) IT Solutions and Services business for EUR850 million in an attempt to create a "European IT champion," both companies said late Tuesday in a joint statement.

The operations of the French IT service company and the German industrial conglomerate's IT unit will compete with International Business Machines Corp. (IBM) and Capgemini (CGEMY, CAP.FR), among others.

As part of the deal, Atos Origin will issue 12.5 million shares, currently worth EUR414 million, giving Siemens a 15% stake the German company will hold for at least five years. Atos Origin also will pay EUR186 million in cash and issue a EUR250 million convertible bond that will be held by Siemens.

The company created by the deal will have 78,500 employees and is generate pro forma revenue of EUR8.7 billion while expecting to raise sales to the EUR9 billion to EUR10 billion range by 2013.

According to Atos Origin and Siemens, the transaction, subject to regulatory approval and approval by governing bodies of Atos Origin, is expected to be closed by July.

Siemens also said the deal will cause "considerable negative earnings impact" for its fiscal year 2011, which ends Sept. 30, but gave no further details.

-By Archibald Preuschat, Dow Jones Newswires; +49-211-13872-18; archibald.preuschat@dowjones.com
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