Why Appen’s (ASX:APX) share price is down nearly 24% in early trade

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Why Appen’s (ASX:APX) share price is down nearly 24% in early trade

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Why Appen’s (ASX:APX) share price is down nearly 24% in early trade
Image source: © Kiosea39 | Megapixl.com

Highlights

  • Appen’s shares are trading in the red after the collapse of its takeover bid.

  • On Thursday, Appen confirmed receiving a takeover proposal from TELUS International.

  • TELUS International proposed to acquire a 100% stake in Appen at AU$9.50 per share.

Appen Ltd’s (ASX:APX) shares are trading deep in the red on Friday morning after TELUS International (Telus) revoked its takeover bid. By 10:05, Appen’s stock was trading at AU$6.32, down 23.58%.

On Thursday, Appen, which is an AI training data company, confirmed receiving a takeover proposal worth AU$1.2 billion from Canadian technology firm TELUS International.

TELUS International proposed to acquire a 100% stake in Appen at AU$9.50 per share via its unsolicited, conditional, and non-binding indicative offer. The bid was at a 48% premium to Appen’s closing share price of (AU$6.40) on Wednesday. In response, the ASX-listed company said that it had considered the AU$9.50-a-share proposal and was seeking improved terms from the Canada-based firm. As a result, Appen’s stock rose over 30% in Thursday’s intra-day trading.

Why would Appen’s stock be under watch today?

After the takeover bid from Telus, Appen’s shares went into a trading halt pending a further update on the proposal.

However, according to the latest update, TELUS International has withdrawn its proposal soon after pitching it.

“Following the receipt of the Indicative Proposal, Appen engaged with Telus in good faith through its advisers to better understand conditions of the Indicative Proposal and to agree on an appropriate confidentiality and standstill agreement (NDA), after which Appen was prepared to make available limited business and financial information,” Appen said in its latest ASX filing.

“Appen and Telus negotiated the NDA to an agreed form and Appen had an expectation that the NDA would be executed by Telus imminently. Following media reports overnight, Appen was required to disclose the Indicative Proposal to the market. This afternoon, Telus informed us that they were revoking their Indicative Proposal. No reasons were given. No confidential information was provided to Telus,” Appen added.

Meanwhile, Appen told Thursday that it had considered Telus’ bid on the advice of financial advisers Barrenjoey Capital Partners and Atlas Technology Group, and legal adviser Allens. Appen was actually seeking improved terms from the Canadian firm.

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