TELUS and TELUS Digital Enter into a Definitive Arrangement Agreement for TELUS to Acquire Full Ownership of TELUS Digital

Executive Summary

• TELUS Corporation has entered into a definitive agreement to acquire all outstanding multiple voting and subordinate voting shares of TELUS Digital (TIXT) not already owned by TELUS for US$4.50 per share, representing an aggregate consideration of US$539 million.
• The transaction values TELUS Digital’s total equity at approximately US$1.3 billion, with a total transaction value of approximately US$2.9 billion based on all outstanding shares.
• The deal represents a 52.0% premium over TELUS Digital’s unaffected closing price on June 11, 2025, and a 32.4% increase from TELUS’s initial proposal of US$3.40 per share.

Key Details

• Consideration Structure: Shareholders may elect to receive:
  • US$4.50 in cash;
  • 0.273 of a TELUS common share; or
  • A combination of US$2.25 in cash and 0.136 of a TELUS common share.
  • Elections for share consideration (ii) or (iii) are subject to proration to ensure no more than 25% of the aggregate consideration is paid in TELUS common shares.
• Premiums and Valuation:
  • 52.0% premium over the unaffected closing price of US$2.96 per subordinate voting share on June 11, 2025.
  • 62.6% premium over the 30-day volume-weighted average price prior to June 12, 2025.
  • 16.0% premium over the closing price on August 29, 2025.
  • BMO Capital Markets formal valuation (as of Sept 1, 2025) placed fair market value in the range of US$3.60 to US$4.70 per share.
  • BofA Securities provided a fairness opinion stating the consideration is fair from a financial point of view.
• Shareholder Support:
  • Unanimous recommendation by TELUS Digital’s Special Committee of independent directors and Board of Directors.
  • EQT (largest minority shareholder, ~31% of subordinate voting shares) has agreed to convert multiple voting shares to subordinate voting shares and vote in favor.
  • All directors and officers (~3.2% of subordinate voting shares) have agreed to vote in favor.
• Conditions and Timeline:
  • Requires approval of at least 66⅔% of votes cast by holders of subordinate and multiple voting shares (voting as a single class) at a Special Meeting.
  • Requires simple majority approval of subordinate voting shares (excluding TELUS and affiliates) under MI 61-101.
  • Court approval and regulatory approvals (including stock exchange and foreign direct investment laws).
  • Special Meeting scheduled for October 27, 2025.
  • Expected closing in the fourth quarter of 2025.
  • Outside date is January 2, 2026.
• Post-Closing: TELUS Digital will be delisted from the NYSE and TSX and cease to be a reporting issuer in Canada. TELUS will own 100% of TELUS Digital.
• Strategic Rationale: TELUS cites closer operational integration to enhance AI and SaaS transformation across telecommunications, health, agriculture, and consumer goods sectors, as well as growth in fintech, gaming, and media.
• Expenses: TELUS agreed to reimburse TELUS Digital’s expenses up to US$10 million if the deal terminates under certain circumstances; TELUS Digital must reimburse TELUS up to US$10 million if the Board changes recommendation and shareholders reject the deal. No break fees are payable.

Notable Quotes

• Darren Entwistle, President and CEO of TELUS: “TELUS Digital’s world-leading capabilities in digital customer experience solutions and AI innovations are highly complementary to our strategy at TELUS... 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... driving positive outcomes for the customers we serve on a global basis.”
• Josh Blair, Co-Chair of the Special Committee of TELUS Digital: “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... 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.”
• Olin Anton, TELUS Digital Special Committee Co-Chair: “The transaction provides immediate and attractive value and liquidity for our shareholders who elect to receive cash, and an opportunity for TELUS Digital shareholders who elect to receive TELUS shares to continue participating in the growth of the business, including in synergies expected to be created through the transaction.”