Search and language data services company Appen is raising $300 million from big shareholders to finance the acquisition of San Francisco-based machine learning technology company Figure Eight.
Appen will pay $US179 million($A249 million) and an earn-out consideration of up to $US125 million ($A177 million) in March next year – the total possible cost could be more than $520 million in 12 months time.
Appen is launching a $300 million capital raising to fund the acquisition of Figure Eight, raising $285 million through a fully underwritten placement at $21.5 a share and $15 million through a non-underwritten share purchase plan.
The placement was priced at an 11% discount to Friday’s closing price of $24.37 (The deal was announced before the market opened yesterday). The shares are due to be relisted today.
Appen said Figure Eight had created a suite of data annotation tools, which automatically transforms unstructured text, image, audio or video data into data which can be used to train artificial intelligence algorithms.
Chief executive Mark Brayan said the acquisition of Figure Eight would let the company exceed customer expectations in regards to scale, speed and quality.
“This is an acquisition that futureproofs Appen,” Mr. Brayan said on Monday.
Mr. Brayan said the upfront payment for Figure Eight represented 5.7 times the company’s 2018 revenue of $A41.5 million.
“We think we’ve struck a good deal here, based on all the market makers,” Mr. Brayan said.
While Figure Eight lost $A22 million last year, Mr. Brayan said it is rapidly growing and heading for profitably.
