Appen Ltd (ASX: APX) shares have emerged from their trading halt with a bang on Thursday.
At one stage the Appen share price was up a massive 28% to $7.50. It has since come down a touch and sits 23% higher at $7.19.
Why are its shares higher?
Yesterday the shares of the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence were placed in a trading halt so it could launch a capital raising in order to fund a major acquisition.
That acquisition was US-based tech company Leapforce. Appen agreed to pay US$80 million for the specialist in search relevance with a highly automated, proprietary end-to-end technology platform.
To do so the company tapped into its cash reserves, debt facilities, and capital markets via a fully underwritten A$25 million placement and A$5 million share purchase plan at $5.80 per share. This was just three cents lower than the last close price.
Judging by the market reaction today, it appears as though investors are very bullish on the acquisition and the price at which the company has been able to raise funds.
And there certainly is reason to be bullish. Management expects the deal to be at least 35% accretive to underlying earnings per share (pre-synergies, expensed transaction costs and share based payments) and believes it will establish Appen as the world's leading provider of search relevance services.
Is it too late to invest?
If this acquisition is as successful as management expects then I don't think it is. Though, investors may want to wait and see if profit taking creates a better entry point over the coming days.
In the meantime, tech shares such as Altium Limited (ASX: ALU) and Aconex Ltd (ASX: ACX) could be worth a look.
