The artificial intelligence services provider and former tech favorite Appen has engaged with Telus International after the Canadian technology company made an initial buyout offer of $1.2 billion.
Additionally, the company issued an update noting that year-to-date revenue is below last year's level and earnings will suffer.
Telus has made an unsolicited, conditional, and non-binding bid to purchase all of Appen's shares through a scheme of arrangement for $9.50 per share, according to Appen.
Thursday morning trading saw a 29 percent increase in Appen's share price to A$8.25, below the indicative offer price, as investors positioned themselves for a potential takeover - including from another company - while allowing for the risk that the negotiations might fail.
Appen shares are priced far below the indicative offer, yet the stock traded above $10 in February of this year and $40 in August of 2020. Appen's board of directors has approached Telus in an effort to solicit a higher offer.
"The Board is currently in negotiations with Telus in an effort to amend the parameters of the Indicative Proposal. To help this, the Board has offered to give limited business and marketing information on a non-exclusive basis," Appen said in a statement.
Appen disclosed that Telus has yet to agree to a mutually acceptable confidentiality and standstill agreement before financial information can be shared.
Appen shareholders have no obligation to respond to the Indicative Proposal. There is no assurance that negotiations with Telus will result in a deal.
The bid is seen to dominate the company's annual general meeting on Friday, which is being held in Sydney.
Appen generates the majority of its revenue by crowdsourcing a global workforce of 1 million individuals to perform menial tasks for internet giants such as Facebook, Google, and Amazon.
The employees instruct computers to recognize basic visuals and voice, creating the framework for the creation of artificial intelligence solutions.
Its stock price plummeted in 2020 after a series of downgrades sparked concerns that its five largest clients, who account for 80% of its income, are becoming less reliant on its services.
Recently, Appen has been swept up in the tech downdraft that has decimated the valuations of US and Australian tech stocks that traded at far higher prices than traditional equities.
The company, which provides a variety of automation tools including applications that assist companies like Facebook compile user data, scrapped its projection for the first time since going public in 2015 - at a price of 50 cents per share - earlier this year.
