Bitfarms Rejects Riot Platforms’ $950 Million Acquisition Proposal, Cites Undervaluation
Bitfarms, a global Bitcoin mining company, has officially announced that it has rejected an acquisition proposal from Riot Platforms on April 22, 2024. The proposal, which offered $2.30 per Bitfarms common share in cash and Riot common stock, was carefully examined by a Special Committee of the Bitfarms Board, which consists solely of independent directors.
In a statement, Bitfarms explained its decision to decline Riot Platforms’ acquisition proposal. According to a recent report by Bloomberg, Riot’s offer valued Bitfarms at approximately $950 million in equity, representing a 24% premium over Bitfarms’ one-month volume-weighted average share price as of May 24, 2024.
The proposed acquisition aimed to combine cash and Riot common stock, with Bitfarms shareholders potentially owning up to 17% of the merged entity. Riot claimed that this proposal would provide immediate value to Bitfarms shareholders and foster future growth within a financially strong company led by an experienced management team.
The initial proposal was privately submitted to the Bitfarms Board of Directors on April 22, 2024, but was swiftly rejected without substantial discussion. In response, Riot decided to make the proposal public, citing new allegations from a lawsuit filed by Bitfarms’ former CEO, which raised concerns about certain directors’ commitment to shareholder interests.
To thoroughly evaluate Riot’s proposal, Bitfarms established a Special Committee Board consisting of independent directors. After reviewing the offer, the committee concluded that it significantly undervalued the company and its potential for future growth. The committee requested customary confidentiality and non-solicitation agreements from Riot to facilitate meaningful discussions but did not receive a response.
As a result, the special committee is now considering the company’s future direction. “Having received additional unsolicited expressions of interest, with each additional party executing a customary non-disclosure agreement, the special committee is conducting a thorough strategic alternatives review to ensure it achieves maximum shareholder value,” Bitfarms stated.
This review may lead to various outcomes, including continuing with the current business plan, pursuing a strategic business combination or transaction, or selling the company.
Bitfarms is facing an acquisition bid from Riot Platforms during a time of management turmoil and a CEO lawsuit. Despite these challenges, Bitfarms believes that executing its growth plan will ultimately maximize shareholder value. The company’s ongoing operational improvements and strategic review are aimed at positioning Bitfarms for sustained growth and a stronger market position within the Bitcoin mining industry.
As Bitfarms navigates these developments, the company is actively searching for a new CEO following the departure of Geoffrey Morphy. Morphy initially planned to remain with the company during the search for his successor. However, on May 10, he filed a lawsuit against Bitfarms for breach of contract, wrongful dismissal, and damages totaling $27 million. Consequently, Morphy was dismissed on May 13, and Nicolas Bonta, the chairman and co-founder, was appointed as interim CEO.
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