CIBC Downgrades Telus International Tender to Neutral, Raises PT to $4.5

CIBC Downgrades Telus International Tender to Neutral, Raises PT to $4.5

In a significant move, CIBC has downgraded its rating on Telus International (TIXT) to Neutral, while raising its price target to $4.5 per share. The decision comes on the heels of Telus Corporation (TSX: T, NYSE: TU) announcing a definitive agreement to acquire all outstanding shares of Telus Digital (TIXT) not already owned by Telus for $4.50 per share, representing a total consideration of $539 million [1].

The acquisition, which has been unanimously recommended by a special committee of independent directors at Telus Digital, aims to enhance operational integration between Telus and Telus Digital, particularly in the areas of AI and SaaS transformation across various sectors, including telecommunications, health, agriculture, and consumer goods. Telus believes that this transaction will drive positive outcomes for customers and accelerate global growth [1].

The price of $4.50 per share reflects a 52.0% premium over Telus Digital’s unaffected closing price of $2.96 on June 11, 2025, and a 62.6% premium over the 30-day volume-weighted unaffected average price of Telus Digital shares prior to June 12, 2025. The transaction values Telus Digital’s equity at approximately $1.3 billion, based on a total of 278.7 million shares outstanding [1].

CIBC’s decision to downgrade Telus International to Neutral and raise its price target reflects the market’s response to the acquisition announcement and the potential implications for Telus Digital shareholders. The rating change suggests that while the acquisition is seen as positive for Telus and its shareholders, there are concerns about the integration process and the potential impact on Telus Digital’s standalone value.

The transaction is supported by Riel B.V., Telus Digital’s largest minority shareholder, which holds approximately 9.1% of the outstanding voting rights. The transaction is expected to be completed by the end of 2025, subject to shareholder approval and regulatory approvals [1].

References:
[1] https://www.stocktitan.net/news/TIXT/telus-and-telus-digital-enter-into-a-definitive-arrangement-yup34n9erx73.html