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 LifeWorksB次元官网网址� employee and family assistance program and benefit administration capabilities to Telus HealthB次元官网网址檚 digital technologies.
Telus Health offers virtual care and provides patients access to digital pharmacy options, home health monitoring and electronic health records.
B次元官网网址淭his transaction is financially compelling and strategically attractive to Telus, and a natural complement to Telus Health,B次元官网网址� 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 TelusB次元官网网址� place in the digital health industry.
B次元官网网址淭his 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,B次元官网网址� he said in a note to clients.
Desjardins analyst Jerome Dubreuil also views the proposed acquisition as a positive for Telus.
B次元官网网址淭he deal could also significantly increase Telus HealthB次元官网网址檚 scale and make the unit mostly self-sufficient in terms of funding new initiatives,B次元官网网址� 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 arenB次元官网网址檛 totally excited about it in this market climate.
B次元官网网址淭he premium (Telus) is paying in a market that is only going one way is not a good look,B次元官网网址� said Baskin Wealth ManagementB次元官网网址檚 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 B次元官网网址渟mooth sailing.B次元官网网址�
LifeWorks shares closed at $18.20 on the Toronto Stock Exchange on Wednesday. Telus shares closed at $29.36.
B次元官网网址 of the deal sent LifeWorks stock up nearly 69 per cent in early trading Thursday.
B次元官网网址擳he Canadian Press
