Telus Corp. said it will acquire digital-health provider LifeWorks Inc. for about $2.3 billion (US$1.8 billion), expanding further into health services as it pursues a diversification strategy. 

Telus will pay $33 for each LifeWorks share and is offering the option to take cash or stock or a mix of the two. It’s about an 80 per cent premium to where LifeWorks closed in Toronto on Wednesday. 

Telus was down 3.1 per cent to $28.45, the lowest since November. LifeWorks rose 68.4 per cent to $30.65 as of 9:55 a.m. in Toronto. 

Digital and telehealth services have become an important dimension of health care after the pandemic forced many patient interactions outside of hospitals and clinics. The combination will allow the companies to form a global provider of primary and preventative digital health care and wellness services, according to a statement by the companies. 

Telus has pursued a different strategy from major Canadian rivals BCE Inc. and Rogers Communications Inc., eschewing ownership of media assets and instead expanding in digital services and technology for companies and individuals. 

Last year, the Vancouver-based company took public Telus International CDA Inc., which provides services such as content moderation, IT support, mobile app design and work-from-home technology. It also has separate divisions offering technology and services to the agriculture and health sectors.

“This transaction is financially compelling and strategically attractive to Telus, and a natural complement to Telus Health, significantly accelerating our vision of advancing employer-based health care, increasing access to high quality, proactive healthcare and mental wellness for employees,” Chief Financial Officer Doug French said in a statement.

Toronto-based LifeWorks provides human-resources consulting, outsourcing, mental health services and other services to companies. It has about 7,000 employees and 25,000 clients. The firm was previously known as Morneau Sheppell and was once run by Bill Morneau, who went on to become Canada’s finance minister from 2015 to 2020. 

Telus will also assume existing LifeWorks debt, making the total value of the transaction $2.9 billion. 

What Bloomberg Intelligence Says 

Telus is acquiring employee-benefits provider LifeWorks in a move that may help sustain top-line growth of 4-6 per cent through 2025 by expanding its digital-health business and furthering a push into adjacent, high-growth segments to offset a slowdown in Canada’s wireless industry. The companies’ product portfolios are complementary, which sets up a good cross-selling opportunity, with potential run-rate synergies of $170-$200 million at a $50 million cost to realize, according to Telus. 

-- Bloomberg Intelligence analysts John Butler and Hoa Nguyen