Bitfarms plays defense as rival Riot still eyes takeover

Bitfarms’ new shareholder rights plan to “preserve the integrity” of the strategic review process that Riot seeks to “undermine,” company claims

article-image

GreenBelka/Shutterstock modified by Blockworks

share

Bitfarms is looking to ward off an attempt by Riot Platforms to take control of the company — at least in the near-term. 

The bitcoin miner rejected Riot’s unsolicited April bid to buy the company, noting in a statement last month that the deal “significantly undervalues” Bitfarms. 

Bitfarms said its board of directors was in the midst of a “strategic alternatives review process,” which includes evaluating options such as continuing to execute its business plan or selling the company.

Riot has declined to participate in Bitfarms’ review process in an attempt to “undermine” it and “thwart the interest of third parties,” Bitfarms claims.

A Riot spokesperson did not immediately return Blockworks’ request for comment.

Read more: A deeper look at Riot’s ‘hostile’ bid to take over Bitfarms 

Now, Bitfarms has put in place a shareholder rights plan to “preserve the integrity” of the board of directors’ process, it said in a Monday news release.

It would allow the company to attach a so-called right to each common share issued after June 20. Those rights become exercisable if an owner holds 15% or more of Bitfarms’ outstanding shares between June 20 and Sept. 10.

In essence, shareholder rights plans often seek to issue more shares as a way to limit the control of a shareholder seeking to take over the company.

Riot Platforms owned roughly 3.6% of Bitfarms stock upon making an offer to buy all of Bitfarms’ remaining shares on April 22. Riot now holds about 11.6% of the company’s stock and said it intended to requisition a special shareholders meeting to nominate what it calls “well-qualified and independent directors.”

Riot plans to “review its investment in the company on a continuing basis,” the company said in a June 5 statement.

If shareholders don’t ratify the plan within six months, the plan will be terminated.

The plan was approved “to ensure, to the extent possible, that the board has sufficient opportunity to identify, develop and negotiate alternatives,” the Monday news release states.   

The miner has pointed out its planned 223% hash rate increase and 40% efficiency improvement in 2024, saying that moving forward toward those projections maximizes shareholder value.

A Bitfarms spokesperson did not immediately comment further.  

Peter Stoneberg, managing director at crypto advisory firm Architect Partners, previously told Blockworks that Bitfarms was “doing everything right to put up a strong defense to Riot’s bid.”

The company, for example, last month named Moelis & Company as its financial adviser, as well as Skadden, Arps, Slate, Meagher & Flom to help it with legal matters. 


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Pic.jpeg

Research

Avalanche has introduced proposal ACP-77, which would drastically lower the barrier to entry to launch a dedicated blockchain, while imposing a continuous fee mechanism that subnets would pay to the P-Chain. By performing a scenario analysis of different dedicated blockchain solutions, we conclude that ACP77 would hypothetically make Avalanche subnets as cost-effective as Celestia-based rollups while providing additional liveness guarantees and native interoperability.

article-image

This week saw an infrastructure layer and a modular blockchain solution lead the way in terms of the amount raised

article-image

The US government says 3 UK nationals conspired to fraudulently earn $2 million in an apparent NFT rug pull

article-image

In the world of decentralized infrastructure, it’s time to put much needed tools into the right hands and create a healthier open internet

article-image

Robinhood announced on Thursday that it plans to acquire Bitstamp for $200 million

article-image

Marathon Digital’s May BTC production was 27% lower than the previous month — less of a dip than its biggest competitors