Bitfarms, a Bitcoin mining company based in Toronto, recently announced the adoption of a shareholder rights plan to protect its strategic review process from takeover attempts by Riot Platforms, a Colorado-based competitor. The plan, commonly known as a “poison pill,” aims to safeguard the interests of Bitfarms’ shareholders by preventing hostile takeover bids. This decision follows Riot Platforms’ proposal to acquire all of Bitfarms’ issued and outstanding common shares for $950 million, prompting Bitfarms to take action to preserve the integrity of its review process.
Riot Platforms currently holds 11.62% of Bitfarms’ shares and has been aggressively acquiring more shares in an attempt to thwart the strategic alternatives review process. Despite the special committee’s determination that Riot’s offer “significantly undervalues the company and its growth prospects,” Riot has declined to participate in the review process and instead focused on increasing its ownership stake. Bitfarms’ Rights Plan sets a threshold of 15% share accumulation before triggering, designed to prevent any immediate threat to the review process.
The Rights Plan will become effective on Jun. 20, with one right issued per common share. These rights will become exercisable if any person, along with certain related persons, acquires 15% or more of the outstanding common shares before Sep. 10, or 20% thereafter, without following the rules set out in the plan. The plan will need to be ratified by shareholders within six months and approved by the Toronto Stock Exchange, potentially leading to a delay in acceptance until the relevant securities commission is satisfied.
In response to Riot Platforms’ actions, Bitfarms’ special committee has emphasized the importance of preserving the integrity of the strategic alternatives review process for the benefit of all shareholders. The committee believes that Riot’s attempts to acquire additional shares and circumvent the review process demonstrate a lack of respect for the interests of Bitfarms’ shareholders and third parties. With a focus on protecting the company’s value and growth prospects, Bitfarms is taking proactive steps to safeguard shareholder interests and maintain control over its strategic direction.
Overall, Bitfarms’ adoption of the shareholder rights plan underscores the company’s commitment to conducting a thorough strategic review process and ensuring that all shareholders have a voice in determining the best path forward for the company. By implementing this plan, Bitfarms aims to prevent any attempts to undervalue the company or disrupt its growth trajectory. As the situation between Bitfarms and Riot Platforms continues to unfold, it will be interesting to see how the adoption of the Rights Plan impacts the outcome of the strategic alternatives review process and the future direction of the company.
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