Bitfarms Implements Shareholder Rights Plan Amid Riot Platforms' Takeover Attempt
Summary:
Bitfarms, a Bitcoin miner, has adopted a shareholder rights plan to manage an unsolicited takeover attempt from Riot Platforms. This plan allows Riot Platforms to increase its share from 15% to 20%, but only with board approval. With Riot's stake in Bitfarms having increased to 11.62% prior to the shareholders meeting, the plan has sparked discussions over the legality and valuation involved in a potential takeover bid. The straightforward rejection of Riot's previous proposal by Bitfarms has led to a switch in strategy from Riot, causing significant tension between the companies whose actions revolve around protecting shareholder interests.
In the aftermath of their Annual General and Special Meeting, Bitfarms, a Bitcoin mining company, has implemented a shareholder rights plan. This strategy would permit Riot Platforms' unsolicited takeover bid to go forward under stringent conditions. The plan's parameters dictate that should any individual or affiliated parties acquire 15% of Bitfarms shares - a Canada-based company - by September 20 and then escalate their stake to 20% without board authorization, other stakeholders would then have the ability to buy common shares at a significant markdown from the then market value.
This progression would pave the way for a prospective takeover bid as permitted under Canadian legislation, but with the contender's share value being reduced in the interim. Riot contends that Bitfarms' board summarily dismissed their April acquisition proposal without any meaningful engagement. Bitfarms, in their narrative, states that though they appreciated Riot's interest, they held the belief that Riot's offer was too low for their share value. Hereafter, Riot altered its tactics and rescinded its initial proposal.
By the shareholders meeting, Riot had augmented its stake in Bitfarms from 3.61% to 11.62%. Amid the shareholders assembly, co-founders of Bitfarms, Emiliano Grodzki, lost his board position in the election. Riot had cast doubts about whether Grodzki and Nicholas Bonta were really working in “the best interests of all shareholders.” Nicholas Bonta managed to retain his position of board chair by a significant number of votes. However, Bitfarms, upon revealing the election output, remarked that, “Independence concerns voiced by certain proxy advisory firms [...] are believed to have led to Mr. Grodzki not being re-elected”.
Riot Platforms had plans to call another shareholders meeting, subsequent to the Bitfarms meeting on 31st May, with the intention of further expanding board membership. In a statement on June 10, Bitfarms labeled this planned meeting part of Riot Platforms' ongoing attempts to disrupt and obstruct its board's review process in order to consider the company's sale.
Published At
6/10/2024 9:03:44 PM
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