TLDR
- Riot Platforms made an unsolicited $950 million takeover bid for Bitfarms, which Bitfarms rejected as undervalued.
- Bitfarms adopted a shareholder rights plan (a “poison pill”) to prevent Riot from acquiring more than 15% of its shares.
- Riot criticized Bitfarms’ poison pill as going against established governance standards by setting the threshold at 15% instead of the customary 20%.
- Riot acquired a 13.1% stake in Bitfarms by purchasing around 6 million shares for $111 million.
- There is tension between the two companies, with Bitfarms accusing Riot of attempting a hostile takeover and Riot criticizing Bitfarms’ corporate governance practices.
A battle for control is heating up between two major Bitcoin mining companies, Riot Platforms and Bitfarms. The conflict began when Riot Platforms made an unsolicited $950 million takeover bid for Bitfarms on May 28.
The offer was based on Bitfarms’ one-month volume-weighted average share price as of May 24.
However, Bitfarms stakeholders were displeased with the offer, which would have required them to relinquish more than 15% of their stake in the company.
A special committee of independent directors at Bitfarms reviewed the proposal and determined that it significantly undervalued the company and was not in the best interests of shareholders.
In response to the rejected offer, Riot Platforms went ahead and purchased approximately 6 million Bitfarms common shares for $111 million in early June.
#Bitfarms Issues Statement re: Riot’s Comments & Actions
• Board is committed to maximizing shareholder value & continues to welcome Riot in strategic alternatives review
• Shareholder Rights Plan preserves integrity of process
• Riot’s interests are not aligned with BITF…— Bitfarms (@Bitfarms_io) June 13, 2024
This acquisition, combined with Riot’s previous holdings, gave the company a 13.1% stake in Bitfarms.
Bitfarms accused Riot of attempting a hostile takeover by acquiring a significant stake in the company.
The Canadian mining firm stated that Riot’s interests were not aligned with those of Bitfarms shareholders and that Riot was trying to “undermine the integrity of the acquisition process” and “push its low-ball bid.”
To defend against Riot’s attempted takeover, Bitfarms adopted a shareholder rights plan, also known as a “poison pill.”
This plan aims to prevent any one shareholder from acquiring 15% or more of Bitfarms’ shares by diluting the value of those shares if the threshold is crossed.
Riot Platforms CEO Jason Les criticized Bitfarms’ poison pill strategy, claiming that it goes against established legal and governance standards. Les argued that the 15% threshold is well below the customary 20% threshold used in such plans.
Despite Bitfarms’ defensive measures, Riot Platforms has continued to increase its stake in the company. In a filing with the U.S. Securities and Exchange Commission on June 11, Riot disclosed that it had acquired around 6 million additional Bitfarms shares, raising its total stake to 13.1%.
The situation has become increasingly contentious, with both companies accusing each other of acting against the interests of shareholders.
Bitfarms has accused Riot of attempting to “short circuit” the decision-making process and has called on the board to remove Bitfarms’ interim CEO, Nicolas Bonta, citing poor corporate governance practices.
