Appen looks to scale with US takeover
Stock
Appen (APX) $24.37 as at 11/03/2019
Event
The artificial intelligence name is in a trading halt this morning as they look to raise money for their next phase of expansion by acquisition.
Appen has agreed to pay $249m for Figure Eight, a US based machine learning company providing another string to the company’s offering. The purchase will be funded by a $300m capital raise which was launched today. The raise will be done at $21.50/share, a ~12% discount to the last traded price.
Figure Eight uses AI to annotate data sets including text & video to complement Appen’s language technology services. The acquisition is expected to add 40-50% revenue for the year, and reduce EBITDA losses by 30-40% with great short & long term synergies and a positive breakeven EBITDA contribution by FY20.
Scale is clearly an important factor for technology firms, and the deal adds scale to Appen’s existing businesses. The company expects a number of cross-selling opportunities as they look to leverage in to Figure Eight’s ~200 customers.
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