Bitfarms Rejects Riots Acquisition Proposal Implements Poison Pill Plan to Deter Takeover Company Value Severely Underestimated
With the conclusion of Bitfarms’ annual shareholders meeting, the company announced the implementation of a stock dilution anti-takeover measure commonly known as a Poison Pill, publicly expressing strong opposition to the acquisition proposal from another mining company, Riot, citing a serious undervaluation of the company’s potential prospects. However, it appears that other mining companies are also eyeing the situation.
Bitfarms Implements Poison Pill Plan, Opposes Riot’s Hostile Takeover
Bitfarms: Serious Underestimation of Company’s Growth Prospects
Are there other competitors?
Mining Company Mergers and Acquisitions May Be Inevitable
Within days of the conclusion of the annual shareholders meeting, Bitfarms announced the implementation of a Shareholder Rights Plan, aimed at opposing Riot’s hostile takeover actions. The Shareholder Rights Plan, also known as a Poison Pill, serves as an anti-takeover measure. Once the acquiring company holds a certain percentage of the target company’s shares (usually between 10% to 20%), the provision is triggered, allowing existing shareholders to acquire a large number of shares at a lower price, thereby increasing the cost for the acquiring party.
The statement indicated that the Shareholder Rights Plan stipulates that if a specific company becomes a holder of over 15% of Bitfarms by September 20 and increases its stake to 20% without board approval, other shareholders can purchase common shares at a price significantly below market value. Currently, the adoption of the Shareholder Rights Plan by Bitfarms is necessary to ensure that the board has sufficient opportunity and time to negotiate, propose, and review strategic alternatives, providing maximum value to Bitfarms’ shareholders.
Bitfarms: Serious Underestimation of Company’s Growth Prospects
In April of this year, Bitfarms experienced the removal of former CEO Geoffrey Morphy and the appointment of co-founder Nicolas Bonta as his successor. Riot subsequently privately proposed an acquisition to Bitfarms’ board, which was rejected. The company then changed its strategy: Riot planned to purchase the remaining shares of the company at a price of $2.30 per share, requesting a special shareholder meeting to add new independent directors to Bitfarms’ board. Currently, Riot’s stake in Bitfarms has increased from 3.61% to 12%.
In a press release yesterday, Bitfarms claimed that the offer severely underestimated the company’s potential growth prospects. The special committee conducted a comprehensive evaluation of the proposal and believed it significantly undervalued the company and its growth prospects. Additionally, research firm Compass Point analyst Joe Flynn stated last week that Bitfarms’ attractive mining infrastructure may attract the interest of many mining companies, including Marathon Digital and CleanSpark.
Bitfarms has also acknowledged receiving interest from many companies in acquiring the company. The internal committee is considering various options, including continuing to operate the business or selling the company. With Bitcoin completing its fourth halving of mining rewards in April, the profitability of major mining companies has significantly declined over the past two months.
Data from The Block shows that the average daily income of Bitcoin miners in the past month is around $35 million, a decrease of over 50% compared to the day of the halving. Due to the increasingly challenging industry environment and competition after the Bitcoin halving, mining companies seem to be undergoing further mergers and integrations to survive these bleak times, with the potential Bitfarms acquisition being a representative case.
