Riot Platforms buys stake in Bitfarms after tender offer rejected

Last update:

May 29, 2024 02:06 EDT
| 1 minute reading

Riot Platforms acquired a 9.25% stake in Bitfarms after its buyout offer was rejected.

According to a Riot Platforms press release issued on May 28, the Bitcoin mining company’s $950 million offer to acquire all outstanding shares of Bitfarms was rejected by the Bitfarms board of directors. Despite this, Riot acquired a 9.25% stake in Bitfarms, making it the largest shareholder.

Riot Platforms becomes the largest shareholder

Riot proposed a buyout price of $2.30 per share, representing a 24% premium to Bitfarms’ one-month volume-weighted average share price as of May 24. Additionally, it reflected a 20% premium to Bitfarms’ stock price on April 19, the last trading day before Riot’s initial proposal.

The consideration offered to Bitfarms shareholders under the proposal included a combination of cash and Riot common stock, potentially giving Bitfarms shareholders ownership of up to 17% of the combined company.

“This cash and stock proposal would provide Bitfarms shareholders with a substantial premium and immediate buyout value,” the statement said. “As well as significant potential for future value creation through participation in a financially and commercially stronger business.” »

The company said the privately presented proposal was rejected without substantive dialogue. Additionally, the lawsuit filed by Bitfarms’ recently fired CEO has raised concerns about whether certain directors are acting in the best interests of all shareholders.

“Accordingly, Riot believes it is necessary to disclose its proposal directly to Bitfarms shareholders,” the statement said.

Concerns About Bitfarms Leadership

After Bitfarms’ annual and extraordinary general meeting on May 31, 2024, Riot plans to convene a special meeting of Bitfarms shareholders to introduce new independent directors to the Bitfarms board of directors.

“A combination of Bitfarms and Riot would create the world’s first and largest publicly traded Bitcoin miner, with geographically diverse operations, well-positioned for long-term growth,” said Benjamin Yi, executive chairman of Riot.

Riot CEO Jason Les has expressed concerns over the recent firing of Bitfarms CEO Nicolas Bonta, suggesting that Nicolas Bonta and Emiliano Grodzki, both founders of the company, may not be acting in the best interest of all Bitfarms shareholders.