FRANKFURT, Germany — In a deal creating Europe's second largest information technology company, Deutsche Telekom AG is paying more than $5.3 billion for a 50.1 percent stake in DaimlerChrysler's Debis Systemhaus GmbH.
Germany's former telephone monopoly declined Monday to say how much it was paying but said it valued all of Debis at more than $5.3 billion and was paying just over that amount for slightly more than half of it.
Debis, a communications software designer that develops applications for e-commerce and corporate communication, is separate from DaimlerChrysler's Debis auto financing division. The deal still must be approved by DaimlerChrysler's supervisory board as well as the European Union antitrust office.
Information technology is one of four main businesses that Telekom chief Ron Sommer wants the company involved in. The others are mobile communication, Internet networks and e-commerce.
"Our partnership with Debis Systemhaus is a big step for us in the world market for information technology and will make Deutsche Telekom the second biggest player in Europe behind IBM," Sommer said, predicting that the market for such services would grow by 20 percent a year.
Spokesman Christian Schubert said Deutsche Telekom's information technology business generated $1.7 billion in revenue in 1998, while Debis' revenue was $2.1 billion.
Deutsche Telekom expects to cut annual costs by up to $194 million by wiping out overlapping operations over the next five years.
A takeover of Debis would give Deutsche Telekom access to a global data transmission network, which Telekom will add to the one it is building. The company writes software for corporate communications systems and builds the infrastructure their computers need to communicate with one another.
In striking a deal for Debis, Deutsche Telekom apparently beat electronics giant Siemens AG, which said last week it had presented an offer for Debis.
DaimlerChrysler was expected to put Debis Systemhaus on the block to raise money for future corporate takeovers. The announcement came as DaimlerChrysler confirmed it would spend $2 billion to buy a third of Japan's Mitsubishi Motors.
With $276 billion in market capitalization, Deutsche Telekom — once a state-owned monopoly and still 65 percent government-owned — ranks third in the telecom world behind Britain's Vodafone AirTouch PLC and Japan's NTT DoCoMo.
But it has been frustrated in recent attempts to make good on its plans for global expansion, backing off its pursuit of U.S.-based Qwest Communications International Inc. earlier this month and still recovering from a bungled attempt to buy Telecom Italia SpA.
At the same time, its Global One alliance with Sprint Corp. and France Telecom has withered on the vine, chalking up mostly losses.