Telus signs deal to buy LifeWorks in deal valued at $2.9 billion including debt

Telus will pay for half the deal in cash and half in shares Author of the article: A pedestrian walks past the Telus Harbour building in Toronto. Photo by Brent Lewin/Bloomberg VANCOUVER — Telus Corp. has signed a deal to buy LifeWorks Inc. valued at $2.9 billion including debt as it pushes further into employee…
Telus signs deal to buy LifeWorks in deal valued at $2.9 billion including debt

Telus will pay for half the deal in cash and half in shares

Author of the article:

A pedestrian walks past the Telus Harbour building in Toronto. Photo by Brent Lewin/Bloomberg

VANCOUVER — Telus Corp. has signed a deal to buy LifeWorks Inc. valued at $2.9 billion including debt as it pushes further into employee wellness and healthcare services.

LifeWorks, formerly known as Morneau Shepell, is an HR firm that helps companies with employee and family assistance plans, absence management, pension and benefits administration and retirement planning.

The transaction will add LifeWorks’ employee and family assistance program and benefit administration capabilities to Telus Health’s digital technologies.

Telus Health offers virtual care and provides patients access to digital pharmacy options, home health monitoring and electronic health records.

“This transaction is financially compelling and strategically attractive to Telus, and a natural complement to Telus Health,” Telus CFO Doug French said in a statement Thursday.

The move comes as digital health and virtual care services saw great success during the COVID-19 pandemic amid lockdowns and concerns about spreading the virus.

Under the agreement, LifeWorks shareholders will have the option to receive $33 in cash or 1.0642 Telus shares for each LifeWorks share, subject to proration.

The amount of cash and number of shares will be limited so that Telus will pay for half the deal in cash and half in shares.

Scotiabank analyst Jeffrey Fan sees the transaction strengthening Telus’s place in the digital health industry.

“This acquisition will position the company as not only a significant force in the corporate well-being and EAP (employee assistance program) space in Canada but also opens the potential for more growth and tuck-ins internationally,” he said in a note to clients.

Desjardins analyst Jerome Dubreuil also views the proposed acquisition as a positive for Telus.

“The deal could also significantly increase Telus Health’s scale and make the unit mostly self-sufficient in terms of funding new initiatives,” he said in a note to clients.

Telus expects the transaction to help generate annual savings in the range of $170 million to $200 million over the next three-to-five years.

The combined companies have corporate clients across Canada, the U.S. and in over 160 countries covering more than 50 million lives globally.

While analysts are generally positive on the deal, some money managers aren’t totally excited about it in this market climate.

More On This Topic

  1. Telus to raise $1.3 billion through equity offering

  2. Telus sees itself as something greater than a telephone company. Is it?

  3. Spinoff Telus International hits stock exchange in largest tech IPO in TSX history

Article content

“The premium (Telus) is paying in a market that is only going one way is not a good look,” said Baskin Wealth Management’s chief investment officer Barry Schwartz.

The deal requires support by a two-thirds majority vote by LifeWorks shareholders as well as court and other regulatory approvals.

The companies hope to close the deal in the fourth quarter of 2022.

Telus said on the conference call with analysts that it does not anticipate much overlap on services between the two organizations both in Canada and internationally, and expects the regulatory process to be “smooth sailing.”

LifeWorks shares closed at $18.20 on the Toronto Stock Exchange on Wednesday. Telus shares closed at $29.36.

News of the deal sent LifeWorks stock up nearly 69 per cent in early trading Thursday.

The Canadian Press

Financial Post Top Stories

Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Read More

Total
0
Shares
Leave a Reply

Your email address will not be published.

Related Posts
Ukraine and Russia: What you need to know right now
Read More

Ukraine and Russia: What you need to know right now

Author of the article: Heavy Russian strikes hit the southern Ukrainian port city of Mykolaiv, killing the owner of one of the country’s largest grain producing and exporting companies, the local governor said. FIGHTING * Oleksiy Vadatursky, founder and owner of agriculture company Nibulon and his wife, were killed in their home, Mykolaiv Governor Vitaliy…
Russia wild card to keep oil markets on edge, execs warn
Read More

Russia wild card to keep oil markets on edge, execs warn

Author of the article: Reuters Stephanie Kelly and Erwin Seba Published Mar 07, 2023  •  3 minute read Join the conversation HOUSTON, March 7 (Reuters) – Executives and officials from some of the world’s top oil and gas companies said on Tuesday energy markets are balanced now, but could easily be disrupted due to tight…