In response to an unsolicited takeover bid from another Bitcoin miner, Riot Platforms, Bitcoin mining firm Bitfarms has introduced a shareholder rights plan to safeguard its shareholders’ interests.
“Bitfarms’ Defensive Measures Against Hostile Takeover Bids”
Bitfarms’ “poison pill” strategy aims to deter hostile takeovers by making them financially burdensome for potential acquirers. This approach allows Bitfarms to proceed with its strategic review process uninterrupted, enabling exploration of various options such as business combinations, strategic transactions, or a potential sale.
“Riot’s actions, including a proposal received on April 22, 2024, and its subsequent market purchases to increase its stake, have been deemed to undervalue Bitfarms by the Special Committee of Independent Directors. This committee believes that Riot’s continued acquisition of shares disrupts the integrity of the strategic review process and could hinder maximizing shareholder value,” the company started.
Effective June 20, 2024, Bitfarms’ rights plan applies to all new common shares and is triggered if an entity acquires over 15% of Bitfarms’ shares by September 10, 2024, or 20% thereafter, without adhering to the plan. This plan allows Riot to make a compliant takeover offer under Canadian securities laws while safeguarding existing shareholders, who can purchase additional shares at a discount if an acquirer breaches the specified thresholds.
Approval from both Bitfarms’ shareholders and the Toronto Stock Exchange is necessary for the plan’s implementation. Currently, Riot’s bid is the sole known takeover attempt.
Previously, Riot Platforms made an unsolicited $950 million offer in May to acquire Bitfarms, offering $2.30 per share in cash and stock privately in April, approximately 20% above Bitfarms’ pre-offer trading price. As of June 5, Riot owns 47,830,440 shares, representing about 11.62% of Bitfarms’ issued and outstanding stock.
After the rights plan announcement, Bitfarms’ stock price (BITF) on the Nasdaq fell by 4.17% in the last 24 hours, while Riot Platforms’ (RIOT) stock price increased by 1.8%. However, over the past 30 days, Bitfarms’ stock price has risen by 44.65%, outpacing Riot’s gain of 4.16%.
