Telus announced last week it has submitted a non-binding indication of interest (IOI) to the board of directors of Telus Digital (formerly known as Telus International) to acquire all of the outstanding subordinate voting shares and multiple voting shares of Telus Digital not already owned by Telus for a proposed price per share of US$3.40.
To be paid in cash, Telus common shares or a combination of both, the proposed price represents a premium of approximately 15 per cent to Telus Digital’s closing share price on the New York Stock Exchange on June 11, and a premium of approximately 23 per cent over Telus Digital’s 30-day volume weighted average trading price based on Canadian composite (Toronto Stock Exchange and all Canadian marketplaces) and U.S. composite (New York Stock Exchange and all U.S. marketplaces) as of such date, according to a Telus press release.
Telus currently owns approximately 92.5 per cent of the outstanding multiple voting shares and 6.1 per cent of the outstanding subordinate voting shares of Telus Digital, representing 57.4 per cent of all outstanding shares, and 86.9 per cent of the combined voting power of all outstanding shares.
“Our proposal to fully acquire TELUS Digital reflects 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,” said Darren Entwistle, president and CEO of Telus, in the company’s press release.
“We anticipate that our deep familiarity with TELUS Digital will enable us to conclude this proposed transaction, with appropriate engagement from TELUS Digital, quickly and efficiently and, post-closing, effectively integrate the business and the team. TELUS Digital will continue to be an important business unit within TELUS, underscored by its demonstrated leadership in customer service excellence, digital transformation and heartfelt caring in the communities where team members live, work and serve. Accordingly, we believe the terms of our proposal are compelling for TELUS Digital shareholders and our leadership team looks forward to working constructively with the independent members of TELUS Digital’s board of directors to progress the proposed acquisition. Notably, we believe this proposed transaction will yield meaningful benefits for TELUS Digital and importantly, for our customers and investors,” Entwistle said.
Telus has asked the Telus Digital board of directors to begin a process to review the IOI and appoint a special committee of independent directors to evaluate the proposal, which Telus Digital said in a press release it intends to do.
The proposal is subject to several conditions, including satisfactory completion of due diligence, negotiation of a mutually acceptable acquisition agreement, securing support from key shareholders of Telus Digital and final approval of the Telus Corporation board of directors. Completion of the proposed transaction is subject to compliance with applicable Canadian and U.S. securities laws, including receipt of a formal valuation, unless an exemption is available, and shareholder and court approvals.
Barclays is acting as financial advisor to Telus, and Stikeman Elliott LLP and A&O Shearman are acting as legal advisors.
Telus International, as Telus Digital was known then, went public in February 2021, with an initial public offering price of $30.70 (or US$25) per share on the Toronto Stock Exchange and New York Stock Exchange, respectively.
Mid trading day on Monday, Telus Digital shares were trading at US$3.59 on the New York Stock Exchange.
