Q: Do you think there is a risk that Telus would make an offer to take over TIXT now that its share price has been severely beaten down? It would be a brutal hit for existing TIXT shareholders but probly a very good move for Telus. I recall TD bank doing exactly this many years ago when they spun out their online trading business and the market didnt price its future growth very well.
Thanks.
Thanks.
5i Research Answer:
It is certainly a possibility, but with TIXT only listed for 2.5 years we might expect Telus to give it some more time. But, at 9X earnings, and Telus itself at 25X, it could justify it, certainly. TIXT still has long term potential, and if the market does not improve this valuation over time T could perhaps make a move. Right now though, we would give this fairly low odds.