We See Little Downside to Telus' Acquisition of LifeWorks; Stock Selloff Is a Buying Opportunity

The agreement to buy LifeWorks for CAD 2.9 billion, including the assumption of debt, will materially expand Telus’ health business and is consistent with the latter firm’s recent interest in further developing its nontelecom businesses. At a purchase price that equates to roughly 15 times adjusted 2021 EBITDA—comparable with the low-double-digit trailing multiple we have determined is appropriate for Telus’ total health business—and represents less than 5% of Telus’ enterprise value, we believe the move creates more potential upside than downside for the stock. We are not changing our CAD 32 fair value estimate for Telus, but the stock now looks attractive.