Bitfarms adopts ‘poison pill’ shareholder rights plan amid hostile takeover attempt
Bitcoin mining company Bitfarms announced that its board of directors has unanimously approved a shareholder rights plan to maintain the integrity of its strategic alternatives review process. This comes into effect immediately.
The plan, also known as the “poison pill,” was designed to prevent any party from gaining control of Bitfarms without providing fair value to all shareholders.
The move comes after Bitfarms rejected an unsolicited acquisition offer from Riot Platforms, which offered to acquire the miner for $950 million.
“poison”
Under the rights plan, one right will be issued for each share of common stock outstanding as of June 20. This right is exercisable if a person or entity acquires more than 15% of Bitfarms’ outstanding common stock without complying with the “permitted bids” of the Plan. food.
Permitted bids must be made to all shareholders, remain open to the public for 105 days and meet certain other conditions. The rights plan is effective immediately, but requires shareholder approval within six months.
Bitfarms also announced that it has been notified by the Toronto Stock Exchange (TSX) that the TSX will postpone consideration of the rights plan until it is satisfied that the appropriate securities commission will not intervene.
The TSX’s delay in accepting the Rights Plan will not affect the adoption or operation of the Rights Plan. Unless terminated earlier, the Rights Plan will continue to operate and remain in effect for at least six months from June 10, the date of adoption.
Unsolicited takeover bids
The move came in response to an unsolicited offer from Riot Platforms, which currently holds an 11.62% stake in Bitfarms, to acquire all outstanding shares.
Riot initially made an offer to acquire Bitfarms on April 22, when it held a 3.61% voting stake in the company. The company said the proposal was prompted by its belief that its board was not acting in the best interests of shareholders.
After evaluating the offer, Bitfarms’ Special Committee of Independent Directors concluded that Riot’s offer significantly undervalued the company.
Despite welcoming Riot’s interest and agreeing to a suspension period, Riot continued to purchase shares, increasing its stake by an additional 8.01%.
The Special Committee believes that the adoption of a rights plan is important to allow the Bitfarms Board of Directors sufficient time to explore and negotiate alternatives that will provide the best value to shareholders.
The plan aims to prevent the strategic review process from being disrupted by Riot’s accumulation of additional shares beyond the 15% threshold, especially in the near term.
