Australia's Appen slumps as Innodata withdraws buyout bid over confidentiality breach

By Ayushman Ojha and Echha Jain

(Reuters) -Appen said on Thursday U.S.-based digital data solutions firm Innodata has withdrawn a non-binding indicative proposal for a buyout, sending shares of the Australian software firm tumbling more than 17%.

Shares of Appen were trading down at A$0.765, as of 0232 GMT, after surging more than 30% on Tuesday when it received the offer. Innodata shares settled 8.3% higher at $6.48 on Wednesday.

Appen had said on Tuesday the proposal offered A$0.70 worth of Innodata shares per share of the company, which at the time represented "a premium in excess of 100% to its share price at the time the indicative proposal was provided".

However, it had refused to provide the actual offer value or the date on which proposal was made, citing confidentiality.

"Overnight, Innodata informed Appen that it was withdrawing the indicative proposal on the basis that it was intended to remain confidential," Appen said.

Innodata's withdrawal of the takeover offer is pulling Appen into high uncertainty and "casting an even darker shadow over its outlook once more", said Hebe Chen, a market analyst at IG Markets.

Appen was one of Australia's star technology firm, which helped train AI models for a number of tech behemoths including Microsoft, Nvidia, Meta, Apple, Adobe, Google and Amazon, until it lost 97% of its share value between 2021 and 2023.

The offer withdrawal comes at a time when Appen has been implementing a raft of cost-saving initiatives and seen its executive team being entirely replaced over the last two years.

The company posted an annual loss of $118.1 million, although it had forecast a return to profit by the end of fiscal 2023.

"Without a clear picture of the business structure and strategy in place, the chance for Australia's star technology firm to capitalize on the AI boom and gear a resurgence diminishes significantly," Chen added.

(Reporting by Ayushman Ojha in Bengaluru; Editing by Shounak Dasgupta, Krishna Chandra Eluri and Sherry Jacob-Phillips)