The Appen Ltd (ASX: APX) share price will be one to watch very closely on Wednesday.
The artificial intelligence data services provider's shares rocketed 30% higher to $1.08 on Tuesday before being thrown into a trading halt.
Appen's shares are now expected to return to trade this morning after the company responded to a price query from the Australian stock exchange.
What's going on with the Appen share price?
Investors were scrambling to buy the beaten down tech stock yesterday amid speculation that it could be a takeover target.
Appen responded to the speculation after the market close and revealed that it has indeed received a takeover proposal.
However, any investors buying shares yesterday might be disappointed to learn that the price that has been offered is notably lower than the current Appen share price.
According to the release, Appen has received a highly conditional, confidential, non-binding, indicative proposal from Innodata Inc (NASDAQ: INOD) that contemplates offer consideration of A$0.70 worth of Innodata shares per Appen share.
While this was a 100% premium to the Appen share price at the time, it is now a 35% discount to where it trades today.
What's next?
The company revealed that its board is currently seeking to understand the potential value to Appen shareholders from the proposed combination. It has agreed to a limited exchange of non-public information on both businesses to occur on a non-exclusive basis.
As things stand, it has made no determination as to whether the indicative consideration proposed by Innodata would be acceptable. It has also warned that there is no certainty that the indicative proposal will result in a binding proposal for Appen.
The Appen share price remains down 55% over the last 12 months despite yesterday's jump.
