Bitfarms Ltd (TSX: BITF) has seen an offer come in from Riot Platforms (NASDAQ: RIOT) to acquire the company in a proposed cash and stock transaction.
The proposed deal would see Bitfarms acquired for US$2.30 per share, which amounts to a 24% premium to the one month volume-weighted average share price of the company. Negotiations have reportedly been going on since April 20, with the offer also representing a 20% premium to the price of the equity a day before the companies engaged in discussions.
Compensation under the current offer was not outlined specifically in terms of the cash component, however the total equity value is said to amount to US$950 million, while Bitfarms shareholders would own 17% of Riot on a post-transaction basis.
The offer has reportedly been rejected by Bitfarms’ board of directors, without engaging in substantive dialogue. Riot has suggested as a result that certain directors are not committed to acting in the best interest of shareholders, while also referencing the recent termination of the firms former CEO.
READ: Bitfarms Hits Hashrate Milestone Of 7 EH/s For Bitcoin Mining
“We are deeply concerned that the founders on the Bitfarms Board – Nicolas Bonta and Emiliano Grodzki – may not be acting in the best interests of all Bitfarms shareholders. The abrupt termination of the Bitfarms CEO without a transition plan in place at a critical period of execution for Bitfarms and the industry, as well as the allegations, if accurate, regarding the actions of certain members of the Bitfarms Board set out in the lawsuit filed by that recently terminated CEO, raise serious governance questions. This is why we intend to call a Special Meeting to give shareholders a chance to bring needed change to the Bitfarms Board and make repairing Bitfarms’ broken corporate governance and maximizing value for all Bitfarms’ shareholders their top priorities,” commented Riot CEO Jason Les.
Riot meanwhile has established a 9.25% stake in Bitfarms, making them the largest shareholder of the company.
On a combined basis, the deal would make Riot the largest bitcoin miner globally, with 19.6 EH/s of current self-mining capacity and 52 EH/s of capacity by year end. Mining would occur across 15 facilities globally, with 2.2 GW of power capacity across all facilities.
“A combination of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally, with geographically diversified operations well-positioned for long-term growth. We were disappointed to learn that the Bitfarms Board rejected our compelling Proposal without engaging in substantive dialogue with us,” said Benjamin Yi, executive chairman of Riot.
Bitfarms last traded at $2.86 on the TSX.
Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
