Appen shares will plunge when trading restarts this morning after its Canadian suitor Telus waved goodbye after a brief flirtation on Thursday.
Appen told the ASX in a statement just before 5pm that Telus had walked away from a near $1.2 billion takeover approach just hours after it was revealed to the market.
That means today’s annual meeting of Appen shareholders is likely to be a noisy one as shareholders will demand answers about what happened to the $9.50 a share indicative offer. That was up from Wednesday’s close of $6.40 and close to the $10 level the shares traded at in February.
“This afternoon, Telus informed us that they were revoking their indicative proposal,” Appen said in its statement after the close of trading late on Thursday afternoon. “No reasons were given.”
Appen had revealed in a pre-trading statement in the morning that its board was in talks with the Canadian company, while also releasing a trading update that warned revenue for the year to date is below last year’s and earnings for the June 30 year would take a hit.
Appen shares surged more than 35% on news of the offer (short of the 48% premium implied by the $9.50 offer price) and were up 29.2% at $8.27 when the company asked for a trading halt at 2.15 pm.
Investors took that to mean that the board was following through in earlier comments that it wanted to see if a higher price was on offer.
Obviously it was not.
The key part of the late afternoon statement read:
“Following receipt of the Indicative Proposal, Appen engaged with Telus in good faith through its advisers to better understand the conditions of the Indicative Proposal and to agree an appropriate confidentiality and standstill agreement (NDA), after which Appen was prepared to make available limited business and financial information.
“Appen and Telus negotiated the NDA to an agreed form and Appen had an expectation that the NDA would be executed by Telus imminently.
“Following media reports overnight, Appen was required to disclose the Indicative Proposal to the market.
“This afternoon, Telus informed us that they were revoking their Indicative Proposal. No reasons were given.
“No confidential information was provided to Telus,” Appen said.
Now the shares will tank once the ASX re-opens this morning with investors keeping a close eye on the AGM which starts at 10am in Sydney’s Hilton Hotel.