Telus Inc. T-T has signed a definitive agreement to take back control of its affiliate, Telus Digital TIXT-T, which has seen its share price plummet since it went public, locking in major losses as the company considers future spinout plans.

Telus will acquire all outstanding multiple and subordinate shares of Telus Digital, which offers technology outsourcing, for US$539-million or US$4.50 per share, the company said in a release Tuesday morning.

This is higher than the US$3.40 the company initially proposed in its June indication of interest.

Telus Digital’s share price made its debut at US$25 after its initial public offering in 2021, but has since declined by more than 90 per cent in the wake of industry-wide pressures on customer-service businesses and the loss of major clients such as Meta Platforms Inc.

In a statement, Josh Blair, co-chair of the special committee of Telus Digital established to consider the proposal and alternatives, recognized the higher share price offer.

“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,” he said.

Telus said it will use “existing liquidity sources on-hand” to support the transaction. Yet the proposed acquisition represents a new cost for Telus, as it aims to pay down its nearly $27-billion in long-term debt and looks to capitalize on its other business lines.

Telus said when first proposing the deal that reacquiring its former spinout would allow it to accelerate its artificial-intelligence and software capabilities across its business lines.

RBC Dominion Securities Inc. analyst Drew McReynolds said in a note to investors Tuesday morning that the proposed acquisition is “consistent with Telus management’s public commentary over the past 18 months around the importance of Telus Digital to the digital transformation” of the company.

Despite the US$200-million increase from the initial proposal, Mr. McReynolds said he still expects the company to meet its previously announced leverage plans for the year, “driven by non-core asset sales, asset crystallizations and what is now a gradually improving telecom operating environment.”

The public listing of Telus Digital was celebrated as the first step in chief executive officer Darren Entwistle’s ambitions to spin off two other business lines, Telus Health and Telus Agriculture and Consumer Goods.

Telus Digital shareholders can elect to receive cash or Telus shares.

The deal is dependent on receiving the approval of at least two-thirds of Telus Digital shareholders of record as of Sept. 12 through a vote at a meeting on Oct. 27, as well as court regulatory approvals.