Atos Origin intends to buy the IT services arm of Siemens in a deal valued at €850m, the companies have announced.
One of the ideas behind the €850m (£720m) deal is to strengthen cloud provision by the companies, which will attempt to create a "European champion in the IT industry", Atos Origin chief executive Thierry Breton told a press call on Wednesday.
"We will be number two in Europe for managed services, and we are committed to becoming the leader in cloud computing in Europe," Breton said. "IBM will become our main competitor."
Siemens Information Solutions (SIS) will combine with Atos Origins Sphere cloud business and its business services operations, Breton said.
"We need huge datacentres and server farms to fill the needs of our customers," he said.
Atos Origin will jump from number six in Europe to number two in managed services revenues, according to Atos and Gartner figures.
SIS will lose 1,750 staff as part of the deal, 650 of those from Germany. Many of the staff will be administrative. The redundancies come on top of 4,200 job losses announced in March.
Atos Origin will take control of pensions provision at SIS as part of the acquisition.
The companies will jointly devote €100m to research and development for new technologies.
"Maybe we will be the Google of tomorrow," said Breton.
As part of the deal, Atos Origin will provide a seven-year long IT services contract to Siemens, worth €5.5bn, while Siemens will take a 15 percent stake in Atos Origin.