Bitcoin mining firm Bitfarms has implemented a shareholder rights plan to protect its shareholders’ interests amidst an unsolicited takeover bid from another Bitcoin miner—Riot Platforms.
This move follows Riot Platforms’ increased stake in Bitfarms and their offer to acquire all outstanding shares.
Bitfarms’ Strategic Defense Amid Hostile Takeover Attempts
Bitfarms’ strategy, known as a “poison pill,” aims to prevent hostile takeovers by making such deals prohibitively expensive for the acquirer. This tactic ensures Bitfarms can continue its strategic review process without disruption, exploring options like business combinations, strategic transactions, or a potential sale.
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“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 stated.
Effective June 20, 2024, the rights plan targets all new common shares and triggers if an entity acquires more than 15% of Bitfarms’ shares by September 10, 2024, or 20% after this date, without adhering to the plan. This rights plan enables Riot to make a compliant takeover offer under Canadian securities laws. It also protects existing shareholders, allowing them to buy additional shares at a discount if an acquirer breaches the specified thresholds.
The plan’s implementation depends on approval from both Bitfarms’ shareholders and the Toronto Stock Exchange. Currently, Riot’s bid is the only known takeover attempt.
BeInCrypto previously reported that Riot Platforms made an unsolicited $950 million offer in May to acquire Bitfarms. Riot privately offered $2.30 per share in cash and stock in April, about 20% above Bitfarms’ trading price before the offer. As of June 5, Riot currently owns 47,830,440 shares, approximately 11.62% of Bitfarms’ issued and outstanding stock.
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Following the announcement of the rights plan, Bitfarms’ stock price (BITF) on the Nasdaq dropped 4.17% in the last 24 hours, while Riot Platforms’ (RIOT) stock price increased by 1.8%. Over the past 30 days, however, Bitfarms’ stock price rose by 44.65%, compared to Riot’s 4.16% gain.
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