Appen share price on watch amid $1.2 billion takeover bid

Appen gets lobbed a $1.2 billion buyout, but is it enough?

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Key points

  • The Appen share price is on watch this morning following an acquisition proposal from TELUS International
  • An offer of $9.50 per share represents a 48% premium to yesterday's closing price
  • Appen is seeking an improved offer from TELUS

The Appen Ltd (ASX: APX) share price is squarely in focus on Thursday morning following news the AI training data company has received a takeover proposal.

Before the opening bell, Appen laid to rest the rumours this morning, confirming the receipt of an unsolicited, conditional, and non-binding indicative proposal from TELUS International. The Canadian technology company is looking to acquire 100% of Appen at a price of $9.50 per share.

This would put an extra ~48% in the pockets of shareholders from yesterday’s $6.40 closing price.

Appen share price on watch amid acquisition news

The Appen share price might be in for an exciting session today following a $1.2 billion offer from one of the company’s competitors.

According to the release, TELUS is pursuing a takeover of Appen by way of a scheme of arrangement. The initial offer is for $9.50 per share. However, the former tech darling is already tapping Telus on the shoulder and asking for a better offer.

In hopes of a sweetened deal, the board is offering TELUS limited business and financial information upon the Canadian company entering a confidentiality agreement. From here, Appen’s board intends to carefully consider any revised proposals put on the table.

Notably, TELUS acquired Lionbridge AI for roughly US$935 million last year. At the time, the company highlighted that Lionbridge was one of only two globally-scaled managed training data and data annotation services providers in the world.

Today’s news suggests TELUS is attempting to secure somewhat of a monopoly by adding Appen under its umbrella.

From here, Appen will be looking to ensure it gets a worthwhile payout for the business. Given the suppressed Appen share price, the TELUS bid looks opportunistic to many.

What else?

Appen provided shareholders with a trading update in addition to the takeover news. Unfortunately, the details continued to paint the picture of slowing performance. Namely first-half earnings before interest, tax, depreciation, and amortisation (EBITDA) being ‘materially’ lower than the prior corresponding period.

Furthermore, the company’s year-to-date revenue is lower than the prior year. The impacted EBITDA has been attributed to investment in transformation, product, and technology. This news comes ahead of the annual general meeting that will be held tomorrow.

The Appen share price is down 43% since the beginning of the year.

Motley Fool contributor Mitchell Lawler has positions in Appen Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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