- Bitfarms has swiftly moved to implement a shareholder rights plan following an unsolicited acquisition proposal from Riot Platforms Inc.
- The plan acts as a defensive strategy to maintain corporate autonomy and prevent hostile takeovers without equitable treatment for all shareholders.
- “This decision underscores our commitment to protecting shareholder interests and ensuring a fair evaluation of strategic alternatives,” said Bitfarms CEO in a recent statement.
Bitfarms enacts a defensive rights plan to fend off unsolicited takeover by Riot Platforms, safeguarding shareholder equity and corporate strategy.
‘Poison Pill’ Strategy Overview
To thwart unsolicited corporate takeovers, Bitfarms introduced a “poison pill” strategy. This defense mechanism aims to complicate hostile bids by issuing new shares to existing shareholders, effectively diluting the stake of any aggressor.
The plan stipulates that each common share as of June 20 will be entitled to one right. These rights become active if any single entity acquires 15% or more of Bitfarms’ outstanding shares, without adhering to the plan’s “Permitted Bid” stipulations.
Permitted Bids must be directed to all shareholders, remain valid for a 105-day period, and comply with several conditions. Despite its immediate effect, the Rights Plan necessitates shareholder ratification within six months.
The Toronto Stock Exchange (TSX) has chosen to delay its decision on the Rights Plan pending assurance from the appropriate securities commission. Nonetheless, the plan remains operational for at least six months from June 10 unless it’s terminated sooner.
Riot Platforms’ Acquisition Effort
In May, Riot Platforms publicly revealed its $950 million acquisition proposal for Bitfarms. This move came after Bitfarms had rebuffed Riot’s original offer in April, which included a $2.30 per share bid in cash and stock, representing roughly a 20% premium over then-current share prices.
After a thorough review, Bitfarms’ Special Committee of independent directors deemed Riot’s offer to undervalue Bitfarms and its growth potential.
By May 28, Riot had acquired a 9.25% ownership in Bitfarms, elevating its stake to 12% following additional share purchases on June 5. With this position, Riot owns a significant bloc of 47,830,440 shares in Bitfarms.
The Broader Implications
This unfolding corporate drama between Bitfarms and Riot Platforms highlights broader trends in the cryptocurrency mining sector. The attempted acquisition underscores the increasing value and competitive dynamics of crypto mining firms. The strategic measures by Bitfarms reflect the delicate balance companies must maintain between shareholder value and autonomy.
Conclusion
Bitfarms’ implementation of a shareholder rights plan serves as a crucial defense against unwelcome takeover attempts, ensuring equity among shareholders and securing its strategic interests. The situation remains fluid, and stakeholders should closely monitor developments as Riot Platforms continues its pursuit. The outcome of this corporate contention will undoubtedly have significant implications for the cryptocurrency mining industry.
