(Reuters) -Canadian wireless carrier Telus Corp has agreed to buy LifeWorks Inc in a C$2.9 billion ($2.24 billion) deal, the companies said on Thursday, looking to tap into rising demand from employers for mental health services.
Telus will combine LifeWorks with its Telus Health unit that connects patients with physicians virtually through its mobile apps such as Akira and Babylon.
The COVID-19 pandemic accelerated demand for remote mental healthcare services as lockdowns put a strain on people's well-being and requests for virtual appointments skyrocketed from a need to avoid in-person visits to hospitals and clinics.
Pandemic-related pressures have created a "tsunami of burnout" and "poor mental health", Telus Chief Executive Darren Entwistle said on a conference call.
"We've seen an unprecedented shift in what is required to support employers in addressing the evolving health and well-being needs of employees, including a greater focus on supporting mental health," Entwistle said.
LifeWorks helps companies offer a range of welfare and clinical services, including mental health, to employees through a cloud-based platform.
LifeWorks shareholders will have the option to receive C$33 per share in cash, or 1.06 Telus shares for each held, or a mix of both. The deal has an equity value of C$2.3 billion, Telus said.
Shares of LifeWorks rose 69% to C$30.68, while Telus fell 3% to C$28.46 in early trading.
The transaction, expected to be completed on or about the fourth quarter, will help Telus Health expand, including a significant U.S. presence, the company said.
Telus expects the transaction to help generate annual savings in the range of C$170 million to C$200 million over the next three-to-five years.
LifeWorks and Telus Health together generated revenue of C$1.6 billion in their latest fiscal year.
($1 = 1.2938 Canadian dollars)
(Reporting by Nivedita Balu, Eva Mathews and Mrinalika Roy in Bengaluru; Editing by Aditya Soni and Sriraj Kalluvila)