Telus International dumps $1.2bn Appen bid

Appen CEO Mark Brayan. Picture: John Feder.

Telus International has walked away from its $1.2bn buyout proposal of Appen.

Appen released a statement to the market on Thursday after earlier issuing a statement about a proposal from Telus to buy 100 per cent of the company at $9.50 per share.

It said that it had been told by Telus that it was revoking its indicative proposal and that no reason was given.

No confidential information had been provided to Telus, Appen said.

As DataRoom reported earlier on Thursday afternoon, speculation had grown that Telus had abandoned its approach.

Appen entered a trading halt on Thursday pending another announcement on the proposal after issuing a profit downgrade earlier in the day.

Brokers around the market said that they believed Telus had walked away.

Appen said the trading halt was in relation to developments surrounding the Telus proposal.

In November 2020, Telus purchased translation expert Lionbridge for $US939m which equated to 21 times its earnings before interest, tax, depreciation and amortisation including debt.

Based on the same multiple for Appen, Telus would need to pay an equity value of about $1.7bn which is about 40 per cent higher than Appen’s current implied equity value.

Technology stocks have sold off aggressively in the past six months.

Earlier, Appen said it would provide Telus some limited financial information while it negotiated a higher price than its $9.50 per share offer.

But brokers said that given the downgrade, the company had no leverage with a buyer.

DataRoom understands private equity has been circling but would likely only be keen to offer an even lower price than Telus, say sources.

It comes as Appen’s major customers like Meta owner Facebook start cutting costs amid the tech sell off in global share markets.

Appen shares on Wednesday closed at $6.40 after trading at close to $40 amid the global pandemic in 2020.