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
GreenBelka/Shutterstock modified by Blockworks
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.
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