What’s driving 30% rally in Appen (ASX:APX) share price?

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  • Appen confirmed a takeover proposal worth AU$1.17 billion from TELUS International.

  • Appen said the Canadian technology firm seeks to acquire its 100% stake at AU$9.50 per share.

  • The bid comes at a 48% premium to its Wednesday’s closing share price (AU$6.40).

Appen Ltd (ASX:APX) on Thursday confirmed that it has received a takeover proposal worth AU$1.17 billion from Canadian technology firm TELUS International. Appen, which is an AI training data company, said that it received a receipt of an unsolicited, conditional, and non-binding indicative proposal from TELUS International, which seeks to acquire its 100% stake at AU$9.50 per share. The bid comes at a 48% premium to Appen’s closing share price (AU$6.40) on Wednesday.

Appen said that it has considered the AU$9.50-a-share proposal and was seeking improved terms from the Canada-based tech firm. 

Triggered by the development, Appen’s shares were trading 31.72% higher at AU$8.43, by 10:05 AM (AEST) today.

Appen’s shares have fallen over 50% in the past year. The share price is down over 40% on a year-to-date (YTD) basis.

What did Appen’s management say?

The ASX-listed data firm said that it has considered the bid on the advice of financial advisers Barrenjoey Capital Partners and Atlas Technology Group, and legal adviser Allens. Notably, Appen is seeking improved terms from the Canadian firm.

“The board is in discussions with Telus to seek an improvement in the terms of the indicative proposal. To facilitate this, the board has offered to provide, on a non-exclusive basis, limited business, and financial information, subject to Telus agreeing to enter into a mutually acceptable confidentiality and standstill agreement, which it has yet to execute,” Appen said in its latest ASX filing.

“The Board intends to consider any revised proposal from Telus in an orderly manner and in the best interests of all Appen shareholders,” it added.

Earlier in 2021, TELUS International had acquired Lionbridge AI for nearly US$935 million.

Trading update

As of 30 April 2022, Appen’s YTD revenue plus orders in hand for delivery were nearly US$297 million, up approximately 14% compared to the corresponding period last year. Appen’s year-to-date revenue is lower than it was at this time last year.

The company expects FY22 revenue to exhibit a greater skew to 2H than FY21. Appen also expects 1HFY22 earnings before interest, tax, depreciation and amortisation (EBITDA) to be materially lower than the prior corresponding period.

Appen is slated to hold its annual general meeting (AGM) on 27 May 2022.

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