Lionbridge, one of the world’s leading language service providers, has sold Lionbridge AI, its data annotation business, to Canadian IT and communications company TELUS for approximately CAD 1.2bn (USD 935m) (an in-depth analysis of the deal is available to SlatorPro subscribers here).
Slator estimates the AI segment’s revenues to be around USD 200m. The unit employs more than 750 employees, according to the TELUS press statement. The deal is expected to close on December 31, 2020.
TELUS, which brands itself as a “digital customer experience (CX) innovator,” said it acquired Lionbridge AI to “support important AI applications as demand for high-quality, multilingual data annotation continues to increase.”
In 2019, the Toronto-listed company generated revenues of over USD 11bn and currently has a market cap of USD 23bn.
The deal is a big win for Lionbridge’s private equity owner H.I.G. Capital, which, after acquiring the Massachusetts-based company in late 2016 for USD 360m, launched a failed bid for US-rival TransPerfect.
With the TELUS deal, H.I.G. has nearly tripled its original investment within the space of four years, while still holding on to Lionbridge’s translation and localization business.
In late 2018, Lionbridge was rumored to be exploring a public listing in Australia, home to No. 1 data annotation provider Appen. But the IPO never came to pass.
Data annotation has become a major growth market and an attractive niche for language service providers. TELUS said that “Lionbridge AI annotates data in text, images, videos, and audio in more than 300 languages and dialects for some of the world’s largest technology companies in social media, search, retail, and mobile.”
Lionbridge has been in the data annotation business for years, leveraging the company’s strong ties with the world’s largest technology firms. Australia-based Appen’s meteoric rise to a USD-3bn market cap provided a strong incentive for Lionbridge to focus on this fast-growing segment. In 2019, Lionbridge acquired Tokyo-based Gengo, folding it into its AI business.
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Speaking at SlatorCon London in 2019, Lionbridge CEO John Fennelly said that “where Gengo is in AI is very consistent with where we want to go. So it was a question for us: do we build out those capabilities or do we take what Gengo is building out with their platform and buy them?” (Watch the video highlights of Fennelly’s SlatorCon appearance here).
Slator will provide follow-up coverage on the deal in the coming days.