Bitfarms Implements Defensive Strategy Against Riot’s Takeover Attempt 🚫
Bitfarms recently announced a shareholder rights plan as a defensive strategy to safeguard its strategic alternatives review process from an unsolicited takeover bid by Riot Platforms Inc. The plan, often referred to as a “poison pill,” aims to prevent any party from gaining control of Bitfarms without offering fair value to all shareholders.
Understanding the ‘Poison Pill’ Strategy 🛡️
A poison pill strategy serves as a defensive mechanism to deter corporate takeovers by increasing the acquisition cost for the potential acquirer. In this case, Bitfarms plans to issue new shares to existing shareholders, thereby reducing the ownership stake of any entity attempting a hostile takeover.
- Each common share outstanding as of June 20 will receive one right under the Rights Plan.
- These rights will only become exercisable if a person or entity acquires 15% or more of Bitfarms’ outstanding common shares without adhering to the plan’s stipulations.
- Permitted Bids must be inclusive to all shareholders, open for 105 days, and meet specific criteria.
Details on Riot Platforms’ Takeover Bid 📉
Riot Platforms unveiled its unsolicited proposal in May, with an offer to purchase Bitfarms for approximately $950 million. Furthermore, Riot expressed its intent to seek a special shareholder meeting to add independent directors to Bitfarms’ board.
- Initial offer by Riot was $2.30 per share in cash and stock, representing a 20% premium on Bitfarms’ share price.
- Bitfarms’ Special Committee of independent directors rebuffed Riot’s bid, citing undervaluation of the company and its growth prospects.
Recent Developments in the Takeover Saga 🔄
Riot Platforms acquired a 9.25% stake in Bitfarms on May 28, subsequently increasing its ownership to approximately 12% by purchasing an additional 1.5 million shares on June 5, totaling 47,830,440 shares beneficially owned by Riot.
Stay tuned for further updates as the situation unfolds between Bitfarms and Riot Platforms.
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