Riot Platforms has introduced a proposal to amass Bitfarms for about $950 million, reflecting a 24% premium to Bitfarms’ one-month volume-weighted common share value as of Could 24.
In line with the press launch, Riot’s determination 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 inside 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 power and strategic imaginative and prescient with Bitfarms’ present operations. Riot Government Chairman Benjamin Yi stated:
“A mixture of Bitfarms and Riot would create the premier and largest publicly listed Bitcoin miner globally, with geographically diversified operations well-positioned for long-term development.”
Riot, already the most important shareholder of Bitfarms with a 9.25% stake, is providing a mixture of money and customary inventory that will end result 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, probably growing to 1.5 GW and 52 EH/s by the tip of the 12 months.
Citi is serving as Riot’s monetary advisor, whereas Paul, Weiss, Rifkind, Wharton & Garrison LLP, together with Davies Ward Phillips & Vineberg LLP, are appearing 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 towards the corporate for wrongful dismissal.
Bitfarms introduced in March that Morphy would step down from his function later within the 12 months as soon as a alternative was discovered. This transition plan was meant to make sure a easy change in management whereas the corporate looked for a brand new CEO.
Nevertheless, Morphy filed a $27 million lawsuit towards the corporate on Could 10, looking for aggravated and punitive damages over allegations of breach of contract and wrongful dismissal. The lawsuit sought $27 million in damages and included allegations towards sure members of the Bitfarms Board of Administrators.
The submitting of the lawsuit led to an instantaneous acceleration of Morphy’s termination on Could 13.
Bitfarms appointed co-founder and Chairman Nicolas Bonta as interim CEO following Morphy’s dismissal. The corporate has acknowledged that Morphy’s claims are with out advantage 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 important time for the corporate and the broader mining trade.
The dispute has added to the challenges Bitfarms faces, together with operational and market pressures following the latest Bitcoin halving. It has additionally precipitated 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 stated in a social media submit:
“We’re deeply involved that the founders on the Bitfarms Board might not be appearing in the most effective pursuits of all Bitfarms shareholders. The abrupt termination of the Bitfarms CEO raises critical governance questions.”
Riot plans to requisition a particular shareholders assembly following Bitfarms’ Annual Normal and Particular Assembly on Could 31, 2024, to suggest new unbiased administrators for the Bitfarms Board.
