Telus and Telus Digital (formerly known as Telus International) on Tuesday announced they have entered into a definitive agreement for Telus to acquire all of the outstanding multiple voting shares and subordinate voting shares of Telus Digital not already owned by Telus for US$4.50 per share, representing a total value of US$539 million.
This follows Telus’s initial proposal in June to purchase all outstanding shares of Telus Digital for US$3.40 per share, which at the time Telus said represented a premium of approximately 15 per cent to Telus Digital’s June 11 closing share price on the New York Stock Exchange. The increased offer of US$4.50 per share represents an increase of 32.4 per cent from Telus’s initial proposed price of US$3.40 per share.
Telus said in a press release the transaction announced Tuesday has received the unanimous recommendation of a special committee of independent members of the board of directors of Telus Digital and the unanimous approval of Telus Digital’s board of directors (with interested directors abstaining).
Telus also said the transaction is supported by Riel B.V., Telus Digital’s largest minority shareholder holding approximately 31 per cent of the outstanding subordinate voting shares and 7.5 per cent of the multiple voting shares.
“In negotiating the transaction, the Special Committee of independent directors was careful to safeguard the best interests of TELUS Digital, its minority shareholders, and all affected key stakeholders,” said Josh Blair, co-chair of the special committee of Telus Digital, in the press release. “Following careful consideration of a wide range of factors and negotiations with TELUS that resulted in an increase in the price first offered by TELUS to minority shareholders of TELUS Digital, and after taking into account valuable feedback we received from our minority shareholders and advice from the Special Committee’s independent legal and financial advisors, the Special Committee determined that the transaction is in the best interests of TELUS Digital and fair to its minority shareholders. We believe the transaction provides more immediate and greater value to minority shareholders on a risk-adjusted basis than is expected to be realizable by TELUS Digital as a stand-alone entity in the foreseeable future.”
The transaction still requires the approval of at least two-thirds of the votes cast by holders of subordinate voting shares and multiple voting shares of Telus Digital, voting as a single class, at a special shareholder meeting to be held on Oct. 27. It also requires approval of a simple majority of the votes cast by holders of the subordinate voting shares, excluding Telus and its directors, senior officers and affiliates, at the special meeting. The closing of the deal is dependent on court and regulatory approvals.
“TELUS Digital’s world-leading capabilities in digital customer experience solutions and AI innovations are highly complementary to our strategy at TELUS,” Darren Entwistle, president and CEO of Telus, said in a statement. “The transaction is fully reflective of our belief that closer operational proximity between TELUS and TELUS Digital will enable enhanced AI capabilities and SaaS transformation across all lines of our business, including telecommunications, TELUS Health and TELUS Agriculture & Consumer Goods, driving positive outcomes for the customers we serve on a global basis. Furthermore, this transaction, once completed, will also accelerate our global growth in products and services to other customers around the world in key verticals, including financial technology, gaming and technology, communications and media, and health, while also delivering significant value for our shareholders.”
