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Telekom buys Daimler unit
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March 27, 2000: 11:07 a.m. ET
Deutsche Telekom boosts tech business; Debis valued at $5.3B
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LONDON (CNNfn) - Deutsche Telekom agreed on Monday to acquire control of Debis Systemhaus, the information technology unit of automaker DaimlerChrysler, for an undisclosed sum to expand its range of telecom-related computing services.
Telekom vied with electronics and engineering firm Siemens to buy Debis to boost its modest technology arm. Europe's largest fixed-line phone company said it values Debis at  5.5 billion ($5.3 billion). Telekom was also the subject of published reports that it will bid for U.S. computer services provider Unisys (UIS: Research, Estimates).
 Telekom is acquiring 50.1 percent of Debis, which offers IT services from software to communications networks. The purchase would create "the second-largest systems company in Europe and generate significant synergies in our home market," Telekom Chief Ron Sommer said.
Debis had sales of 2.9 billion last year and is likely to be combined with Telekom's existing tech unit, Dete-System, which last year reported revenue of 3.4 billion German marks ($1.7 billion). Telekom expects cost savings of between 150 million and 200 million over the next five years.
The German communications firm is reorganizing its business to focus on four key areas -- wireless and fixed-line telecommunications, Internet services and information systems.
DaimlerChrysler is selling Debis to narrow its focus on its core auto business. It already agreed to combine its aerospace arm with France's Aérospatiale-Matra (PARO) before offering shares of the merged entity to investors. The carmaker agreed Monday to buy a controlling 34 percent stake in Japan's Mitsubishi Motors Corp. for roughly 2.1 billion ($2 billion).
Deutsche Telekom (FDTE) has been on the acquisition trail in Europe and the U.S., but talks to buy Qwest Communications Inc (Q: Research, Estimates). and US West Inc. (USW: Research, Estimates) bombed earlier this month. Telekom recently sold its share in loss-making business communication venture Global One to rival and former partner France Telecom.
The German company has been trying to convince investors that it can put last year's failed bid for Telecom Italia behind it and become a global player.
Telekom shares fell 2 percent to 87.50 mid-afternoon, while DaimlerChrysler (FDCX) was little changed. 
--from staff and wire reports
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