Appen Ltd (ASX: APX) shares are crashing after returning from a trading halt.
In morning trade, the artificial intelligence data services company's shares are down 21% to 85 cents.
Why are Appen shares crashing?
Investors were fighting to get hold of the company's shares on Tuesday on the back of takeover speculation. This led to the Appen share price rising a massive 30% to $1.08 before being slammed into its trading halt.
Well, it turns out that there's no smoke without fire.
After the market close, Appen responded to a price query from the Australian stock market operator and revealed that it has been in takeover discussions with Innodata Inc (NASDAQ: INOD).
However, the market may be disappointed to learn that the price being discussed is significantly lower than where Appen's shares were trading yesterday. It states:
Appen recently received a highly conditional, confidential, non-binding, indicative proposal from Innodata, a New Jersey based NASDAQ listed entity, in relation to a potential combination of the two companies through a stock-for-stock transaction (the Indicative Proposal). The Indicative Proposal contemplates offer consideration of A$0.70 worth of Innodata shares per Appen share (which equated to a premium in excess of 100% to the Appen share price at the time the Indicative Proposal was provided).
The Appen board is now seeking to understand the potential value to Appen shareholders from the proposed combination and has agreed to a limited exchange of non-public information on both businesses to occur on a non-exclusive basis.
It also notes that it has made no determination as to whether the indicative consideration proposed by Innodata would be acceptable.
Appen's shares are now down 65% since this time last year.
