Bitfarms’ stakeholders and special committees view Riot’s $950 million acquisition offer as undervalued and not in the best interests of shareholders.
Two Bitcoin mining corporations are engaged in a heated competition for ultimate ownership. Bitfarms, a Canadian Bitcoin miner, has accused Riot Platforms, a Colorado-based company, of attempting a hostile acquisition.
In its initial proposal on May 28, Riot Platforms proposed a $950 million acquisition offer that exceeded Bitfarms’ one-month volume-weighted average share price as of May 24, (2024).
Nevertheless, Bitfarms stakeholders were dissatisfied with the decision to forfeit over 15% of their ownership in a corporate acquisition. Riot announced the acquisition of approximately six million Bitfarms common shares for $111 million in June, shortly after that.
Riot acquired a 13.1% stake in Bitfarms, expanding its previous holding. Bitfarms maintained that this action was “an attempt to compromise the integrity of the acquisition process.” Bitfarms stated:
“It is clear that Riot’s interests are not aligned with those of Bitfarms shareholders, and instead of participating in the Special Committee’s process in good faith, Riot is attacking Bitfarms’ Board and corporate governance in an effort to push its low-ball bid and disrupt the Strategic Alternatives Review Process.”
Bitfarms did not promptly respond to Cointelegraph’s request for comment.
Independent directors constitute the Bitfarms special committee, which evaluates unsolicited proposals and “resolves that the proposal is not in the best interest of shareholders and significantly undervalues Bitfarms.”
To avert an “unsolicited takeover bid” from Riot Platforms, Bitfarms implemented the shareholder rights plan on June 10.
Bitfarms maintained that its rebuttal was in the best interest of its shareholders and that Riot intended to “short circuit” the decision.
Bitfarms maintains 12 Bitcoin mining facilities in four countries: Argentina, Paraguay, the United States, and Canada. After filing a lawsuit against the mining firm, Bitfarms announced in May that its former CEO, Geoffrey Morphy, would resign.
Nicolas Bonta has been serving as the interim president and CEO of the company until a replacement for Morphy is selected. Les urged the board to remove Bonta, asserting he “bears direct responsibility for [Bitfarms’] poor corporate governance practices.”