British IT jobs at risk as Euro merger draws closer

Hundreds of British IT service jobs could be at risk when the expected merger of two of Europe's largest technology groups, Atos Origin and T-Systems, is unveiled.

Talks are understood to be ongoing between Atos, which has its headquarters in France and is listed on the Paris stock exchange, and the German group, which is a subsidiary of Deutsche Telekom.

Deutsche Telekom had been expected to launch a €4.5bn (£3.1bn) bid for Atos in the next few days. The plan was to create a combined company that would be run by Atos's management, and could retain a listing in Paris.

However, there is now speculation that the talks may centre on creating a different structure for the merger, which would see Atos buy T-Systems, with Deutsche Telekom taking a large stake in the resulting company.

Atos is one of the fastest-growing IT operations in Europe, having been created by a series of mergers stretching back a decade. Formed from the combination of Axime and Sligos in France, it came together with Origin in 1997. At the time, Origin was owned by Philips, the Dutch electronics giant.

Three years ago, Atos bought KPMG's consulting business in the UK and the Netherlands, and last year it bought Sema, the Anglo-French telecoms and IT services group, which was previously owned by Schlumberger. That purchase left the group employing more than 46,000 staff worldwide, with almost 5,000 in the UK alone.

Atos has been known to be on the hunt for another large acquisition, and is looking to expand in Germany, where it is perceived to be weak. Deutsche Telekom, for its part, is keen to concentrate on telecommunications, and took a long look at buying the UK's O₂, before eventually dropping the plan earlier this month.

IT experts believe a merger would be a good deal for both groups. "Atos Origin has a strong track record in integrating large, underperforming IT services businesses," said François Dauriat, an analyst at Ovum, an IT market consultant.

Neither Atos Origin nor Deutsche Telekom said it was prepared to comment on market speculation.