Core Scientific Denies Unsolicited Buyout Offer from Coreweave Amidst Financial Turnaround
Summary:
Core Scientific, a leading publicly traded mining firm, has rejected an unsolicited acquisition proposal from AI computing and cloud services provider Coreweave. The company dismissed the offer of $5.75 per share after stating it significantly undervalued the firm's growth and value-creation prospects. Amid various business collaborations with Coreweave, Core Scientific had faced bankruptcy in December 2022 due to market downturns but has seen significant financial improvement recently, with stock prices reaching new highs since being relisted on the stock market.
Core Scientific, a leading publicly traded mining firm, recently disregarded a surprising and non-requested acquisition proposal from Coreweave, a company known for AI computing and cloud services. This unexpected move was revealed on June 3 via a press statement by Core Scientific. The firm, after thorough analysis, declined the non-requested proposal of $5.75 per share. They reasoned that the proposal significantly undervalued their company, given its growth potential and the prospects for value creation in the near and long-term future. They concluded that this offer wasn't in the company's or the shareholders' best interests.
Core Scientific's denial comes on the back of them generating $812M from mining Bitcoin in 2023. This dismissal follows a sequence of sustained business collaborations between the two companies, the latest of which permitted Coreweave to lease 18% of Core Scientific's infrastructure for twelve years.
In March 2023, Core Scientific entered a lease agreement with Coreweave to rent out a tier-3 data center - a move aimed at diversifying their revenue sources. The Austin, Texas-based data center offers 16 megawatts worth of capacity for Coreweave's high-performing AI computing services.
At the apex of the cryptocurrency bear market, Core Scientific filed for Chapter 11 bankruptcy in December 2022, as was the case with several mining firms, facing issues like elevated energy costs, low Bitcoin prices, and other industry bankruptcies due to high debts and adverse market conditions.
In January 2024, Core Scientific relisted on the stock market after 13 months of restructuring, but swiftly experienced a 30% dip in stock value. From that point until May end, the stock price of Core Scientific stayed significantly below the relisting peak of $6.10 per share.
However, towards the end of May and start of June, the firm's fortunes changed, thanks to the reported financial improvements for Q1 2024 with total revenues reaching $179.3 million. Consequently, Core Scientific's stock price hit a new high since being relisted and is now around $8.02.
Published At
6/6/2024 8:04:07 PM
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