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Downsizing artificial intelligence (AI) annotator Appen (ASX: APX), which has been stuck in the doldrums following the collapse of a major Google contract and is shutting down offices, has announced the withdrawal of a takeover offer only shortly after it was revealed.
Following an ASX query into why its shares had surged 27 per cent to $1.11 on Tuesday, which prompted a trading halt, Appen announced after the market closed that day that it had been confidentially engaged with various suitors looking to either invest or buy the business outright.
It also highlighted a highly conditional, confidential, non-binding, indicative proposal from New Jersey-based Innodata (NASDAQ: INOD) to offer Appen shareholders $0.70 worth of INOD securities per APX share.
This level is below Appen's share price before Tuesday's uptick, valuing the company at just over $153 million, but is higher than the APX price at the time the proposal was made.
Appen agreed to a limited exchange of non-public information on both businesses to occur on a non-exclusive basis, but made no determination as to whether it would be acceptable.
This morning the embattled company has revealed that the fleeting offer has been withdrawn.
"Overnight, Innodata informed Appen that it was withdrawing the indicative proposal on the basis that it was intended to remain confidential," Appen stated.
Appen's former chief operating officer Ryan Kolln was propelled into the company's top leadership job in February after then-CEO Armughan Ahmad abruptly resigned in the wake of Google terminating its US$82.8 million (US$125.6 million) contract which had represented roughly 30 per cent of annual revenue.
At the time Google's move was speculated by some to be the result of the rapid improvement of late in artificial intelligence (AI) that would render outsourced search quality rater workforces like Appen's redundant.
However, Google's hardline stance came very soon after protests from the Alphabet Workers' Union (AWU) representing Appen contractors led to a significant pay rise to US$14-14.50 an hour, which Forbes reported was an increase of up to 45 per cent for some workers who had been living on "poverty wages" beforehand.
Appen provides much of the grunt work that has powered the explosion of AI, utilising contractors around the globe known as search quality raters who cross-check and label data that trains AI systems. The company currently draws on a crowd of more than one million skilled contractors across 170 countries who speak more than 235 languages.
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