German competition regulator extends investigation into IBM takeover of T-Systems

Big Blue’s takeover has been in the second stage of investigations since March

IBM’s takeover of T-Systems, the mainframe services business owned by Deutsche Telekom, has been delayed.

Germany’s national competition regulator, Bundeskartellamt, says it has not had enough time to investigate the deal and that it has agreed a two-week extension with both companies.

When takeovers are investigated by Bundeskartellamt the regulator has one month to finish the “first-phase” of investigations. If it judges the takeover to be problematic, it can request a formal investigation that extends the review by up to four months.

The takeover has been in the second stage of investigations since March. As the Bundeskartellamt was unable to reach its decision within the allotted timeframe, the regulator has agreed to a further two-week extension with both companies, a spokesperson told The Register.

After the acquisition was announced in January, T-Systems denied it was being taken over, saying it would continue to offer the bulk of its IT services, with IBM providing a share.

German reports have since claimed that up to 400 T-Systems staff are moving to IBM.

Mainframe relevancy

Despite competition from cloud services, 80 percent of the world’s corporate data is still managed by mainframes.

Despite the continued relevancy of mainframes to enterprise IT, T-Systems has struggled to stay relevant, and last year announced major job cuts.

The company hired Adel Al-Saleh as its new CEO in 2018 in an attempt to turn around its fortunes.

However the firm reported a drop in earnings for 2018 and flat revenues in Q1 2019, which it put down to continued decline of its traditional IT business, growing investment and a transition to an IP network.

Speaking to Reuters in April, Al-Saleh said T-Systems was on track to boost profits of its core business.