Bitfarms, a Bitcoin mining company based in Toronto, has implemented a shareholder rights plan to safeguard its strategic review process from potential takeover attempts by Riot Platforms, a Colorado-based company. The Rights Plan, also known as a “poison pill,” is aimed at protecting Bitfarms’ shareholders and ensuring the integrity of the review process. This decision comes in response to Riot Platforms’ recent actions, including a proposal to acquire all of Bitfarms’ common shares for $950 million and an attempt to requisition a special meeting of shareholders to bypass the review process.
Riot Platforms currently holds 11.62% of Bitfarms’ shares and has been acquiring additional shares in an effort to undermine the strategic review process. Bitfarms’ special committee has rejected Riot’s offer, stating that it significantly undervalues the company and its growth prospects. Despite welcoming Riot’s interest, Bitfarms notes that Riot has declined to participate in the review process, choosing instead to acquire more shares to interfere with third parties’ interests.
The Rights Plan establishes a 15% share accumulation threshold before being triggered, with one right issued per common share starting on Jun. 20. This right becomes exercisable if any person or related entity acquires 15% or more of Bitfarms’ outstanding shares before Sep. 10, or 20% thereafter, without adhering to the plan’s guidelines. The Plan must be ratified by shareholders within six months and approved by the Toronto Stock Exchange, potentially causing a delay in acceptance pending satisfaction by the relevant securities commission.
Overall, Bitfarms’ adoption of the shareholder rights plan is a proactive measure to protect its shareholders and strategic review process from potential hostile takeover attempts by Riot Platforms. By setting clear thresholds and guidelines for share accumulation, Bitfarms aims to maintain the integrity of its operations and maximize shareholder value. The company’s decision to implement the Rights Plan underscores its commitment to transparency and fairness in corporate governance, ensuring that all stakeholders’ interests are taken into account during the strategic review process. Adopting such measures is essential for Bitfarms to navigate potential challenges and disruptions while pursuing its growth objectives and maximizing shareholder returns in a competitive market environment.
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