Health care drives Telus’ takeover bid for Emergis

Telus Corp.’s decision to acquire Emergis Inc. reflects a recognition that the Canadian health care sector is the “single biggest industry opportunity” awaiting the Burnaby, B.C.-based telecommunications provider, according to its president and CEO, Darren Entwistle.

Telus announced Thursday it is offering to pay $763 million to buy the Longueuil, Québec-based IT service firm, which caters to the health care and financial services sector.

The key to success in continuing to execute its national growth strategy in the areas of data, IP and wireless is to focus on specific industries that can most benefit from advanced communications technologies, said Entwistle.

While Telus has reaped success in the health sector with more than 2,000 Canadian health care customers, he said, this acquisition will only serve to improve that.

“The transaction we’re seeing today will allow us to deepen that insight in the health care vertical in a fundamentally strategic way.”

Telus’ goal is to transform the Canadian health care industry that’s “facing challenges of historic proportions” with rising costs resulting from age-related chronic disease and the associated introduction of expensive new treatments, he said.

To that end, the company plans to provide health care practitioners “point-of-care” access to health information with information management systems that will “require a secure robust and ubiquitous wireline and wireless network that supports standards-based health care applications and services.”

The point-of-care could include a home, clinical setting or patients on the move. Telus’ goal to transform the health care sector will hinge on acquisitions like that of Emergis, as well as partnerships with customers and strategic alliances with the likes of Accenture and Microsoft, said Entwistle.

Focusing on the health care sector is what has driven Emergis’ growth, admitted the company’s president and CEO, Francois Coté. But he added the company has also focused on community building, which now coupled with the ability to provide network connectivity and mobile access is “a huge, huge advantage to us.”

The acquisition will grant Emergis access to Telus’ client base, sales channel and finances, said Coté, adding there were other contenders besides Telus during the bidding process.

Telus will gain a piece of the business process optimization (BPO) market with the acquisition, wherein health care and financial services are the dominant verticals, said Joe Natale, executive vice-president of Telus business solutions.

“The BPO market is a very important market in Canada,” he said, adding that businesses seek those vendors who can provide a complete array of capabilities in that area.

This move by Telus follows a global trend that sees other countries investing in electronic health record information management systems and reaping significant benefits, said Natale – and at the heart of which has been a telecommunications provider.

The acquisition also aligns with Telus’ strategy launched four years ago to focus on four verticals: health care, financial services, oil and energy and government services, he said.

Entwistle noted that Emergis is a different business today that’s more focused on the Canadian market and a narrow set of verticals than it was in 2004 when Bell Canada Enterprises spun it off as an independent unit. “It’s not appropriate to draw inference from what BCE has chosen to do vis-à-vis what Telus believes is the right strategy for our organization.”

Natale, who will be managing the Emergis integration and has ongoing responsibility around the merger moving forward, said success of the partnership will hinge on preserving Emergis’ business model and focusing initial efforts on aligning the sales channel.

He added that Telus might focus on other possible acquisitions down the road “likely much smaller in nature” to augment offerings.

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