Telus International makes US$1.2B play for WillowTree during busy week for B.C. tech sector – Technology

Telus’ head office in downtown Vancouver. The telecom’s spin-off, Telus International, announced Oct. 27 it was acquiring WillowTree. | Rob Kruyt, BIV

Telus International (TSX:TIXT), a spin-off from Vancouver-based Telus Corp. (TSX:T), says it is acquiring full-service digital product provider WillowTree for US$1.225 billion, including debt, as it looks to continue growing. 

The acquisition deal, announced Thursday, comes the same week Vancouver unicorn Visier Solutions Inc. revealed it was expanding its own portfolio and international reach by purchasing Paris-based Boostrs for an undisclosed amount.

“Valuations have come down a lot, so it’s definitely a buyer’s market vs. years past,” Visier chief strategy officer Dave Weisbeck told BIV prior to the announcement of the Telus International deal.

Visier is a workforce analytics firms that hit unicorn status last year following a US$125-million Series E funding round led by Goldman Sachs Asset Management.

Boostrs specializes in technology that helps identify and match skills with workplace needs.

Mergers and acquisitions (M&A) expert David Raffa told BIV in an email “valuations are being challenged and resulting in some predatory offers by buyers.

“But to some extent this has been set off by the increasing cost of debt capital, somewhat slowing down M&A activity,” the president of Valeo Corporate Finance Ltd., a sell-side M&A banker, said about the broader global climate for valuations.

“The ones who will win in the short term, through 2023 and into 2024, are the cashed-up buyers.”

Telus International went public early last year and has a market cap of $2.23 billion.

The digital consulting business says the assumed debt of the WillowTree deal amounts to US$210 million, of which US$125 million will be settled in Telus International’s subordinate voting shares, approximately US$160 million will be reinvested by certain eligible management team members and the remainder will be paid in cash when the deal closes.

The spin-off says as part of the transaction, majority stakeholder Insignia Capital Group will sell its stake in WillowTree after initially investing in the company in 2018.

Headquartered in Charlottesville, Va., WillowTree operates in the United States, Canada, Brazil, Portugal, Spain, Poland and Romania, and works with clients such as CBC, PepsiCo, Anheuser-Busch InBev, Manulife and Marriott.

Telus International says WillowTree will help it expand its global footprint to Brazil and Portugal, and support product development across its business, particularly within health and agriculture and consumer goods.

The deal is expected to close in January 2023, and is subject to customary closing conditions and regulatory approvals.

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