Riot Platforms has introduced a proposal to amass Bitfarms for roughly $950 million, reflecting a 24% premium to Bitfarms’ one-month volume-weighted common share worth as of Might 24.
Based on the press launch, Riot’s resolution to make a hostile takeover bid follows Bitfarms’ Board of Administrators’ rejection of its non-public proposal with out substantive engagement.
The provide, which was initially made privately on April 22, comes amid inner turbulence at Bitfarms, together with a CEO dispute and subsequent lawsuit.
Largest public miner
The acquisition goals to create the world’s largest publicly listed Bitcoin miner, combining Riot’s monetary energy and strategic imaginative and prescient with Bitfarms’ present operations. Riot Govt Chairman Benjamin Yi mentioned:
“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.”
Riot, already the biggest shareholder of Bitfarms with a 9.25% stake, is providing a mixture of money and customary inventory that will consequence within the latter’s shareholders proudly owning about 17% of the mixed entity.
The proposed merger would create a Bitcoin mining powerhouse with roughly 1 GW of present energy capability and 19.6 EH/s of self-mining capability, doubtlessly growing to 1.5 GW and 52 EH/s by the tip of the yr.
Citi is serving as Riot’s monetary advisor, whereas Paul, Weiss, Rifkind, Wharton & Garrison LLP, together with Davies Ward Phillips & Vineberg LLP, are performing as authorized advisors.
Bitfarms has but to reply publicly to Riot’s newest proposal.
CEO dispute
Riot’s announcement comes amid vital turbulence at Bitfarms associated to the sacking of its former CEO, Geoffrey Morphy, who has filed a lawsuit in opposition to the corporate for wrongful dismissal.
Bitfarms introduced in March that Morphy would step down from his position later within the yr as soon as a substitute was discovered. This transition plan was meant to make sure a clean change in management whereas the corporate looked for a brand new CEO.
Nonetheless, Morphy filed a $27 million lawsuit in opposition to the corporate on Might 10, in search of aggravated and punitive damages over allegations of breach of contract and wrongful dismissal. The lawsuit sought $27 million in damages and included allegations in opposition to sure members of the Bitfarms Board of Administrators.
The submitting of the lawsuit led to a right away acceleration of Morphy’s termination on Might 13.
Bitfarms appointed co-founder and Chairman Nicolas Bonta as interim CEO following Morphy’s dismissal. The corporate has said that Morphy’s claims are with out benefit and intends to defend itself vigorously.
Governance considerations
Morphy’s abrupt departure and the following authorized battle have raised vital considerations about governance practices inside Bitfarms, notably at a crucial time for the corporate and the broader mining business.
The dispute has added to the challenges Bitfarms faces, together with operational and market pressures following the current Bitcoin halving. It has additionally brought about concern amongst shareholders, together with Riot.
Riot executives, together with CEO Jason Les, raised considerations about Bitfarms’ governance following the dispute, notably the actions taken by co-founders Bonta and Emiliano Grodzki.
Les mentioned in a social media put up:
“We are deeply concerned that the founders on the Bitfarms Board may not be acting in the best interests of all Bitfarms shareholders. The abrupt termination of the Bitfarms CEO raises serious governance questions.”
Riot plans to requisition a particular shareholders assembly following Bitfarms’ Annual Normal and Particular Assembly on Might 31, 2024, to suggest new unbiased administrators for the Bitfarms Board.
