Atos Origin S.A.

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Atos Origin S.A.

Immeuble Les Miroirs
18, avenue d'Alsace
92926 Paris La Défense Cedex
France
Telephone: +33 1 55 91 20 00
Fax: +33 1 55 91 20 05
Web site: http://www.atosorigin.com

Public Company
Incorporated: 2000
Employees: 26,473
Sales: EUR 5.3 billion ($6 billion) (2004)
Stock Exchanges: Euronext Paris
Ticker Symbol: ATO
NAIC: 541611 Administrative Management and General Management Consulting Services

Atos Origin S.A. has emerged as Europe's third largest IT services company, and ranks among the world's top 20 IT consultancy companies. Atos Origin is a full-service systems integration provider in three primary areas: consulting, systems integration, and managed operations. The company focuses particularly on the following markets: financial services; consumer packaged goods/retail; discrete manufacturing; process industries; telecoms, media, and utilities; and the public sector. Major customers include ABN AMRO; BNP Paribas; Euronext; PPR; Procter & Gamble; Unilever; Alstom, BMW, and Renault; Akzo Nobel, Schlumberger, and Shell; France Telecom; KPN and Telecom Italia; and the French Ministry of Education and the UK Metropolitan police. Atos Origin is highly focused on Europe, which accounted for 90 percent of its EUR 5.3 billion ($6 billion) in revenues in 2004. France remains the company's single largest market, at 27 percent of sales, while the U.K. and Benelux markets each add about 20 percent. Managed operations, such as IT systems for the 2004 and 2008 Olympic Games, represent 50 percent of the group's sales, and systems integration adds 41 percent. Consulting, the company's newest area of operation, adds 9 percent to sales. Atos Origin is the result of a string of acquisitions, including the purchase of KPMG Consulting in 2002 and SchlumbergerSema in 2004. Atos Origin is listed on the Euronext Paris Stock Exchange.

Early French IT Entrants in the 1970s

Although Atos Origin itself was formed in 2000 through the merger of France's Atos and The Netherlands' Origin, its own origins reached back to the earliest days of the information technology market. A result of a long series of mergers and acquisitions, Atos Origin emerged as a major European IT company, before joining the ranks of the global leaders in the mid-2000s.

The first major merger leading toward the later Atos Origin occurred in 1972, when French management systems pioneer Cegos Informatique, founded in 1962 as part of the Cegos consultancy, merged with Sliga, the subsidiary responsible for the growing data processing operations of Crédit Lyonnais, formed in 1970. The merged company was then named Sligos, with Crédit Lyonnais retaining majority control.

Sligos grew into one of France's leading IT companies during the 1970s. A major factor in the company's success was its participation in the development of the country's banking card system. In 1973, Sligos was chosen by the country's bank to develop the data processing backbone for the proposed Carte Bleue, which allowed credit card-like purchases throughout the country. By 1975, Sligos's system processed some 2.5 million transactions per year—a number that was to increase to more than 30 million per year by 1980. The development of the microchip permitted Sligos, which also began fabricating cards, to roll out electronic "smart" card processing systems during the 1980s. By the end of that decade, the Carte Bleue system had been extended nationwide, and the company's card production neared 50 million cards.

Sligos went public in 1986, and then, at the end of the decade, began expanding beyond France. By the early 1990s, Sligos had entered the United Kingdom through its purchase of Signet in 1991, and Germany through the Marben Group, as well as Italy and Spain. Into the mid-1990s, Sligos began a restructuring, exiting a number of operations, including the production of smart cards, in order to refocus its business around a core of systems integration services.

By then, the French IT industry was in the midst of a long consolidation effort, which saw the emergence of a small number of larger groups capable of competing on a European, and even global, scale. Among these groups was Axime, which proposed to merge with Sligos in 1996.

Axime stemmed from the creation of Sodinforg in 1981 by four associates at the Centre Technique Régionale Carte Bleue in Nancy. That company grew quickly through the 1980s, making a number of acquisitions, including Perbanq in 1984, Sedap in 1986, Segime Industrie in 1987, and Stratégie Informatique in 1989. By the end of the 1980s Sodinforg had become France's third largest smart card systems developer.

In 1991, Sodinforg agreed to merge with the number four in the French market, Segin, and another important IT services group, SITB. The merged company, led by Bernard Bourigeaud, then underwent a restructuring to focus on three core operations: electronic transaction processing; software engineering; and systems integration. As part of its restructuring, Axime sold off a number of businesses, including its check personalization and POS terminal businesses, representing some 50 percent of its total revenues.

Creating Atos in the 1990s

Instead, Axime began reinforcing its core businesses, while extending its operations to include online multimedia and outsourcing services. As part of that effort, the company acquired stakes in a number of businesses, and also began expanding beyond France, notably with the establishment of Segin Italie in 1991.

In 1993, the merged company formally adopted the name Axime, replacing Segin's listing on the Paris Bourse's secondary market. In that year, the company acquired CTL and its subsidiary Finaxine. Axime also acquired the network of offices operated by Comelog in the south of France that year. In 1995, Axime moved its listing to the Paris Bourse's monthly settlement market. Soon after, Paribas, which had held 88 percent of its stock in Axime, began selling off its holding, reducing its shares to 26 percent by the following year.

Axime continued making acquisitions, such as Iris in 1995. The company also acquired stakes in a number of other businesses, such as 30 percent of Carte Jeunes, while boosting its stakes in others, such as ODS (raised to nearly 73 percent) and Altek (to 100 percent). Axime also gained a boost to its outsourcing operation with the acquisition of the outsourcing division of ADP-GSI, which enabled Axime to gain the contract for operating the Paris Bourse's quotation and clearing systems. The company then set up a joint venture, later renamed as Euronext, with the Société des Bourses Françaises to develop these systems.

Bourigeaud now sought to raise Axime's profile still further. In 1996, Bourigeaud led Axime into merger talks with Sligos. That merger was completed by mid-1997, and by September 1997, the new, larger company had settled on a new name, Atos.

Following the merger, Atos launched a reorganization effort, including the creation of four strategic divisions: Services, Multimedia, Outsourcing, and Systems Integration. The company also sold off a number of noncore holdings at that time, including a computer hardware retailing operation, a direct marketing company, and its network interconnection software development business. At the same time, Atos made a number of strategic investments, buying up Sesam in Italy and buying out its minority partners in a number of subsidiaries.

Global Player at the Beginning of the 21st Century

Atos continued seeking acquisition opportunities into the new century. In 2000, for example, Atos acquired Odyssée, which focused on providing consulting services for the financial and banking sectors. Atos also made strong gains in its outsourcing and e-business operations, picking up a number of important clients, such as Vivendi and Peugeot. By the beginning of the 2000s, Atos was one of Europe's e-business systems providers.

Nonetheless, Atos remained focused, in large part, on the French market and enjoyed little name recognition elsewhere. That situation changed dramatically in 2000, when the company agreed to acquire Origin, owned by Royal Philips Electronics. Origin had been formed only in 1996, when BSO, founded in 1976, merged with Philips's Communications and Processing Services division, which itself had been formed in 1991. The merged company now became a player in the European market, claiming the number three spot among the continent's IT groups, with annual revenues of EUR 2.8 billion.

Atos Origin, still guided by Bernard Bourigeaud, now joined a trend in the IT services industry toward the convergence of traditional systems integration and management with consulting services. In 2002, the company acquired the U.K. and Netherlands operations of KPMG Consulting, which began operating as ATOS KPMG. The acquisition, which cost the company EUR 657 million ($620 million) helped raise Atos Origin's profile, boosting it to the number ten position among IT services providers in Europe. Atos Origin also scored an important outsourcing contract that year, agreeing with the Netherlands' KPN to take over nearly all of its IT operations. This contract, worth more than EUR 1 billion, helped Atos Origin consolidate its position as the number two native European IT services company.

Company Perspectives:

Atos Origin is committed to establishing and sustaining operational excellence and striving for continuous improvement in all its dealings with its clients. We will continue to grow expertise by developing business and alliances, creating partnerships, and entering into joint ventures. We believe that this is the most productive way of developing business, with both parties sharing the risks and rewards of the association and helping to shape the future.

By the end of 2003, Atos Origin was ready to move into global big leagues. In September 2003, the company announced that it had reached an agreement to acquire SchlumbergerSema, a leading provider of IT services to the oil industry, as well as the holder of contracts to supply the IT systems for the 2004 and 2008 Olympic games. The addition of Schlumberger-Sema's operations catapulted Atos Origin's revenues past EUR 5 billion.

The 2004 Olympic Games represented an opportunity for Atos Origin to raise its international profile. At the same time, the SchlumbergerSema acquisition allowed Atos Origin to penetrate a new and potentially vast market: China. Atos Origin inherited SchlumbergerSema's contract to provide IT support services for six of the ten Chinese credit card-issuing banks. Atos Origin now made plans for further expansion in China, expecting to quadruple its operations there by as early as 2006. With a history of successful mergers behind it, Atos Origin had taken a place as global IT services leader for the new century.

Principal Subsidiaries

Atos Investissement; Atos Multimédia (Italy); Atos Odyssée; Atos Origin (The Netherlands); Atos Origin Formation; Atos Origin GMBH (Germany); Atos Origin Infogérance; Atos Origin Intégration; Atos Origin International; Atos Service N.V. (Benelux); Atos S.p.A. (Italy); Atos TPI; Atos Worldline; AtosEuronext; Atos-ODS Origin (Spain); GTI (Spain); Immobilière Industrielle Faidherbe; Origin France; St. Louis RE (Benelux).

Principal Competitors

Pinkerton Computer Consultants Inc.; KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft; PwC Deutsche Revision AG; Ernst and Young L.L.P.; Deloitte & Touche LLP; Cap Gemini S.A.

Key Dates:

1962:: Cegos Informatique (subsidiary of Cegos) is created.
1970:: Sliga (subsidiary of Crédit Lyonnais) is created.
1972:: Cegos Informatique and Sliga merge, creating Sligos.
1973:: Sligos is awarded a contract to develop the data processing backbone of the Carte Bleue.
1976:: BSO (Netherlands) is founded.
1981:: Sodinforg is created.
1991:: Sodinforg, Segin, and SITB merge to create Axime; Philips C&P is created.
1993:: Axime formally adopts its name and lists on the Paris Bourse's secondary market.
1996:: Axime and Sligos agree to merge; BSO and Philips C&P merge to form Origin.
1997:: The merger of Axime and Sligos creates Atos.
2000:: Atos acquires Odyssée; Atos and Origin merge to form Atos Origin.
2002:: Atos Origin acquires the U.K. and Netherlands businesses of KPMG Consulting for EUR 657 million.
2004:: Atos Origin acquires SchlumbergerSema, becoming the largest European IT services company.