Appen loses $154m offer as Innodata claims confidentiality broken

Innodata has pulled its Appen offer with the company claiming the proposal was meant to remain confidential.

Appen's new chief executive Ryan Kolln.

Innodata has abruptly withdrawn its $154m takeover offer for Australian AI company Appen, citing confidentiality clauses.

The Nasdaq-listed company claimed Appen breached a condition that the stock-for-stock offer remain confidential, a day after the bid was made public.

“Innodata had submitted the proposal to Appen’s board on February 13, 2024, a condition of which was that the proposal remain confidential,” the company said.

Appen defended its disclosure of the stock-for-stock takeover offer, saying it was responding to an ASX share price query in a timely manner.

“As part of Appen’s response to the price and volume query letter, it disclosed that it had received a highly conditional, confidential, non-binding, indicative proposal from Innodata, in relation to a potential combination of the two companies (the indicative proposal),” the company said in a statement.

Appen was informed of Innodata’s decision to revoke the offer overnight, the company said.

This is the second time a takeover bid for Appen has been abruptly withdrawn over the past two years, with the earlier bid coming from Canadian IT firm Telus.

Telus had lobbed a $1.2bn takeover of the company in mid 2022 before it abruptly withdrew its offer.

Innodata’s offer arrived at a value of just around 10 per cent of that offered from Telus, just two years later. Innodata had offered Appen shareholders 70c worth of Innodata shares for each Appen share, valuing the deal at $153.5m.

Innodata’s offer represented a premium of more than 100 per cent when the offer was made. But in the past month, Appen shares have more than tripled, raising eyebrows and questions from the ASX.

The twist is yet another in the rollercoaster ride of one of the ASX’s once-hottest tech stocks.

Former Appen CEO Armughan Ahmad.

Appen has lost two chief executives within 14 months, with former boss Armughan Ahmad announcing his abrupt departure last month after the company lost a $US82.8m contract with Google.

That decision was sprung on Appen without notice, the company said, and in response it announced it would make $US13.5m ($20.7m) worth of cost cuts as it sought to plug the $US82.8m hole left on its balance sheet from Google’s shock contract termination.

The major cuts would cost the company as much as $US2.5m – understood to include lay-off payments – and include the closure of two of its North American offices.